Motion on Amendments 1 to 14
1: Clause 4, Page 3, line 22, after “Act” insert “and provision made under it”
2: Clause 4, Page 3, line 23, leave out paragraph (b) and insert—
“(b) by an auditor (a “local auditor”) appointed in accordance with this
Act or provision made under it.”
3: Clause 4, Page 3, line 24, leave out subsection (2)
4: Clause 5, Page 4, line 6, at end insert—
“(2A) Subsection (2) applies to a provision of or made under this Act even if it makes specific provision about a smaller authority to which the regulations apply.”
5: Clause 5, Page 4, line 9, leave out “an” and insert “a local”
6: Clause 5, Page 4, line 10, at end insert—
“(aa) make provision about the persons that may be specified by the Secretary of State;”
7: Clause 5, Page 4, line 18, leave out paragraph (d) and insert—
“(d) confer functions on a specified person, including in relation to—
(i) the appointment of local auditors under the regulations,
(ii)the activities of such auditors, and
(iii) the resignation or removal from office of such auditors;”
8: Clause 5, Page 4, line 21, leave out from “consult” to end of line 23 and insert “such persons as are specified in the regulations before exercising specified functions.”
9: Clause 5, Page 4, line 23, at end insert—
“(f) make provision for the appointment of a local auditor in relation to the accounts of a smaller authority to which arrangements within paragraph (a) apply where the specified person does not make an appointment under the regulations (and in particular for such an appointment to be made by the authority or the Secretary of State).”
10: Clause 5, Page 4, line 28, leave out paragraphs (b) and (c) and insert—
“(b) make provision about the procedures to be followed in relation to opting into or out of those arrangements;
(c) impose duties on smaller authorities to which those arrangements apply, including duties as to—
(i) the payment of fees to a specified person, and
(ii) the provision of information to a specified person;
(d) make provision for the making of payments, in specified circumstances and by the smaller authorities to which those arrangements apply, to a fund of a specified kind for the purposes of meeting local auditors’ costs of a specified kind.
(4A) Provision made by regulations under subsection (1) by virtue of subsection
(4)(c)(i) may, in particular—
(a) provide for fees to be paid in accordance with a scale or scales of fees determined by a specified person, and
(b) provide for the payment in specified circumstances of a larger or smaller fee than is set out in the appropriate scale.”
11: Clause 5, Page 4, line 35, leave out “an” and insert “a local”
12: Clause 5, Page 4, line 37, leave out “audit of such accounts” and insert “functions of a local auditor in relation to the accounts of a smaller authority”
13: Clause 7, Page 5, line 29, leave out “an auditor (a “local auditor”)” and insert “a local auditor”
14: Clause 8, Page 6, line 26, at end insert—
“(ba) specifies the period for which the local auditor has been appointed,”
My Lords, I beg to move that this House do agree with the Commons in their Amendments 1 to 14 en bloc. I shall speak also to the other amendments in this group, which amend the provisions for the appointment of local auditors.
Although I see that the Bill is not attracting a great deal of attention this afternoon, it is worth saying briefly that it increases local accountability and transparency, and helps local people to hold councils and local bodies to account for their spending decisions. The Bill is the final step in a programme of reforms to local audit that will result in an estimated £1.2 billion of savings over 10 years.
Before I go on to explain the amendments in this group, I pay tribute to my predecessor and noble friend Lady Hanham, who, as noble Lords will know, was responsible for taking this Bill through your Lordships’ House last year. All credit should go to my noble friend for amendments that the Government have accepted or are making to the Bill in response to debates in your Lordships’ House. I know that other noble Lords would want to join me in acknowledging her work on the Bill. I only regret that she is not in her place today. Indeed, because of the technical nature of the Bill, I perhaps regret that she is not at the Dispatch Box, but I will do my best.
Commons Amendments 1 to 13, 17, 31 and 33 would enable the development of sector-led collective procurement arrangements. They would allow the sector to come together and, if it wishes, to establish a body to procure auditors on behalf of local public bodies that choose to participate. These amendments fulfil a commitment made by the Government during Report in the Lords and reflect opposition amendments proposed both here and in the other place. The Government recognise the potential benefits of local authorities coming together jointly to procure their auditor as a means of achieving efficiencies and economies of scale and keeping audit fees low.
The Bill already allows two or more authorities jointly to procure their auditor. However, following calls from the sector—the Local Government Association in particular—and noble Lords, these amendments go further to allow for large-scale collective procurement led by a separate sector-led body.
As the Government have previously stated, any collective procurement arrangements established under these regulations will be voluntary. Local authorities will be able to choose to participate or to make their own appointment locally.
Commons Amendment 17 inserts into the Bill a new clause that will allow the sector to establish collective procurement arrangements. Under the new clause, the Government will, by regulations, make provision for certain authorities to have their auditor appointed by an “appointing person” specified by the Secretary of State. This will allow the Secretary of State to designate a sector-led body as an appointing person, and give them the necessary powers and duties to act as a collective procurement body. From now on, I will refer to the appointing person simply as the sector-led body.
Regulations will set out the process by which authorities choose to participate in sector-led arrangements, the process for specifying a sector-led body, and the powers, functions and duties of such a body. This would include, for example, a power to levy fees on opted-in authorities, and a corresponding duty on the body to consult before setting those fees.
Regulations under the new clause will also be able to modify other parts of the Act as they apply to authorities that have opted into the collective procurement arrangements. We intend to use this power to ensure that, where necessary, other provisions reflect the different appointment process for these authorities. For example, authorities that opt in and do not make their own appointment will not need to establish an independent auditor panel.
Commons Amendment 31 provides that regulations made under this new clause will be subject to the affirmative procedure. The Government also intend to consult publicly on draft regulations before they are made.
Commons Amendments 1 to 3, 13 and 33 would make minor changes to the definition of a local auditor in the Bill. These minor amendments are necessary in the light of the wider amendment to enable sector-led collective procurement. They reflect the fact that an authority could in future have their auditor appointed by a sector-led body, rather than make an appointment itself.
Commons Amendments 4 to 12 would make a number of minor changes to the existing provisions in the Bill that already allow for sector-led collective procurement for smaller authorities. They ensure consistency with the new clause introduced by Amendment 17, and clarify the Government’s powers to make regulations in relation to such arrangements.
Commons Amendment 14 will ensure that the term of an auditor’s appointment is confirmed publicly when the appointment is made. It will support greater transparency, and ensure that the public and audit firms know when the existing audit contract for a local body is due to end. The amendment reflects previous discussions on this matter both here and in the other place. Having considered the case for this further, the Government accept that it would be useful to put the matter beyond doubt through this amendment. The noble Lord, Lord McKenzie, proposed a similar amendment in Committee and will, I hope, therefore welcome this amendment today.
Amendment 46 is a minor amendment that would clarify that existing legislative requirements will continue to apply to audit committees of health service bodies where they act as the independent auditor panel. This will ensure that the operation of legislation governing health body audit committees is not unintentionally affected by this Bill.
There has been strong support for a collective approach to auditor procurement and appointment from all sides of the House during the passage of the Bill, and I hope these amendments will be welcomed.
My Lords, I begin too by thanking and joining the Minister in her tribute to her predecessor, the noble Baroness, Lady Hanham. I think we would agree, on all sides of the House, that she was always willing to listen—not always to agree, and indeed sometimes she might have agreed but might not have been able to say so. Certainly she would always listen, and if a reasonable case was made she would do her best to see that, so I thank her for that.
I wish the Minister every success, having picked up the baton. She commented that there was not huge interest in this Bill. She might not be aware that perhaps that was in part because, at the start of this Bill, the Secretary of State was reported to have said of this Bill, “It is not as interesting as it sounds”. Those of us who have worked on the Bill tirelessly through the summer would not necessarily echo the reported comments of the Secretary of the State.
Often—not always—with debates on local government legislation, we genuinely try to improve the legislation, whether we like it or not, to make it more workable. This is a very good example of how that success has been achieved. I reminded myself by looking back to our Second Reading debate in this House back in the summer. Indeed, the issue of joint procurement was raised at that stage. It received, I think it is fair to say, a sympathetic response, and here we come to the last stage of the Bill, when we are actually getting what we on all sides of the House were seeking.
This is a very useful and important measure. It is voluntary. Local authorities are given the opportunity to opt in to a shared arrangement. That was what we were seeking. It is not mandatory. They are not required, but they are able—exactly as we want—to choose what is best for their particular circumstances, so I thank the Minister. I welcome these amendments and I feel confident that they will have a general welcome on all sides of the House.
My Lords, let me welcome the Minister, the noble Baroness, Lady Stowell, to her first, and probably last, foray into the delights of the Bill. I am sure, deep down, she regrets not having had the opportunity to be engaged in our earlier detailed debates.
Perhaps, before a more detailed comment on this group of Commons amendments, I should acknowledge that much of what is before us this afternoon springs from matters that were pressed on the Government by noble Lords—Lib Dems, as well as ourselves and others. Like others, we pay tribute to the noble Baroness, Lady Hanham, for the way in which she was receptive to these matters and to the Government for fulfilling the commitments made by that Minister.
These amendments also bear the hallmark of the diligence of my honourable friend Andy Sawford in another place. A key amendment in this group is Amendment 17, which as the Minister has explained gives the Secretary of State the power to introduce regulations for the development of a sector-led approach to collective procurement. Amendment 31 properly requires the regulations to follow the affirmative procedure.
The retention of a collective procurement capability was one of the major issues that we debated. Of course, the detail of what might be forthcoming will have to await the regulations. It was pressed, among others, by the LGA and the National Association of Local Councils. This impetus was driven by the significant savings that the Audit Commission had achieved in its outsourcing of audit contracts. Of course, the contracts in question run to 2017 and can be extended. I do not know whether the Minister can confirm, under these proposed arrangements, who will make the decision about the extension of those contracts. Any different arrangements will happen some time in the future.
It is understood that the Government’s position is that they will not themselves use these regulations to set up another entity, but will respond to any sector-led approach that might arise. Discussions have already taken place with the LGA.
We are pleased to support these amendments because they keep alive the prospect of further collective procurement of audit services in the future. Clearly, the appetite to engage in collective procurement will be influenced by the balance of power in the market in the future—how competitive the audit market actually is and how many firms will participate, as well as how local authorities, particularly smaller ones, engage with what can be a sophisticated process.
There are other matters which neither this nor any other government arrangement addresses, covering how the existing outsourced audit contracts are to be maintained after the demise of the Audit Commission, the future of the value-for-money profiles and the Audit Commission’s current certification obligations. We have still not had satisfactory answers after pressing these questions throughout the various stages of the Bill. Perhaps the Minister can help us further today.
We accept that Amendments 1, 2, 3, and 13 make minor necessary changes consequent on Amendment 17. In doing so, they obviate our concerns on the original drafting of Clause 4(1)(b). We understand that Amendments 4 to 12 make minor changes to the provisions for the modified arrangements already provided for in the Bill for smaller authorities.
Other than consistency of drafting with Amendment 17, it is unclear whether Amendment 6 is in any way intended to change or narrow who might be appointed auditors of smaller authorities. Perhaps the Minister can clarify that.
Amendment 7 updates the function that might be conferred on a person under the smaller authorities’ provisions, but in doing so deletes any reference to the power to specify fees or a scale of fees. Can the Minister please confirm that such functions are accepted as included within the functions set out in Amendment 7, especially as Amendment 8 does not specifically refer to consulting on the scale of fees?
Amendment 14, requiring the term of an auditor’s appointment to be published together with other details, is a matter that we pressed in Committee and my honourable friend Andy Sawford argued convincingly in another place. We are grateful to the Government for their acceptance of this.
All in all, this group of amendments is generally to be welcomed. We are pleased to support them.
My Lords, I am grateful to my noble friend Lord Tope and to the noble Lord, Lord McKenzie, for welcoming the amendments that we are currently discussing. I certainly agree with my noble friend Lord Tope that while the matters that come out of the DCLG might not always attract widespread interest, they are always important. I am glad to be responsible for this late stage of this piece of legislation.
The noble Lord, Lord McKenzie, asked some specific points which I am happy to respond to. On his question on whether Amendment 6 changes or narrows who might be specified as concerns the appointment of auditors of smaller authorities, I can be clear that it is not the Government’s intention to do so. We do not intend to use this power to make any further requirements which would have that effect, or under the new Clause 17 to principal authorities.
The noble Lord also asked whether it could be confirmed that functions of the auditor appointment, such as its powers to specify fees or scale of fees, could be included in Amendment 7. I reassure the noble Lord that the amendments to Clause 5 retain provision for the specified person to set a scale or scales of fees. Of the original drafting of provisions in Clause 5 relating to the setting of fees by the person specified by the Secretary of State to appoint auditors to smaller authorities, Clause 5(3)(d) is deleted by Amendment 7. These provisions are replaced by those in Amendment 10. The new provisions unpack the arrangements relating to fees to clarify that the regulations will impose duties on authorities which are opted into the specified persons’ regime to pay fees in accordance with a scale or scales of fees determined by the specified person.
More generally, on the questions of the noble Lord, Lord McKenzie, about audit contracts and transitional arrangements, I reiterate the importance that the Government place on ensuring that the Audit Commission’s existing audit contracts continue to be well managed following its closure. These contracts have a combined annual value of £85 million and will continue to run until 2017, at which point we intend to introduce local or sector-led appointment of auditors. Noble Lords will be aware, however, that the contacts include provision to allow them to be extended for a further three years to 2020. While it remains our intention to introduce local appointment from 2017, no formal decision is needed on extension until closer to the scheduled end of the contracts. At that point, this will be a decision for the Government to take in conjunction with the interim body managing the contracts.
Given the length of the existing contracts, we need to make sure that the organisation that manages these contracts in the period following closure of the commission and introduction of local appointment is capable of putting in place resilient governance and management arrangements. In consultation with the Audit Commission and other key government departments and delivery partners, my officials have agreed a set of criteria against which all options should be assessed. They are now working with counterparts in interested organisations and have shared a set of requirements, roles and responsibilities alongside an invitation to formalise a proposal to the department to perform the role of designated transitional body. Subject to further work with each of the organisations, proposals will then be evaluated against the agreed criteria and we plan on making a decision by the spring.
I should add some remarks on another topic which I was not sure whether the noble Lord had raised in his question to me; if he did not I should perhaps have covered it in my opening remarks. Grant certification is a further critical issue raised in both Houses during the passage of the Bill. When the commission closes, the few remaining grants requiring certification will be certified through arrangements agreed between grant-paying bodies, the recipients and their auditors. There is one exception to these arrangements: the Audit Commission will continue to make arrangements to certify the housing benefit subsidy scheme for the 2014-15 return, due to its complexity and size, before the move to universal credit. However, work to complete this and oversee auditors’ work in autumn 2015 will then need to be undertaken by the designated transitional body. We are therefore drawing on the commission’s expertise to ensure that appropriate measures are put in place to support this work and also that Section 28 of the Audit Commission Act is saved so the designated transitional body can take on this function.
Finally, I will talk briefly about the future of the commission’s value-for-money profiles. The LGA has expressed an interest in taking on this tool and we are in discussions with it, the Audit Commission and others, including the National Audit Office. We are therefore currently considering the future options for the profiles with these partners with the aim of making a decision by the spring.
I hope that by providing this additional information I am able to reassure noble Lords that we are working towards a resolution on each of these points and intend to reach a decision on outstanding transitional issues well in advance of the Audit Commission’s closure. I also take this opportunity to thank the Audit Commission for its assistance and support in advancing these matters with my officials and other interested parties. We have been very grateful for its input.
With all that additional information, I hope that I have been able to answer any outstanding questions from noble Lords.
Motion on Amendments 1 to 14 agreed.
Motion on Amendments 15 and 16
15: Clause 11, Page 8, line 41, at end insert—
“(8) The auditor panel of a parish meeting may only exercise the function in subsection (2) in relation to the chairman of the parish meeting or the proper officer of the district council within whose area the parish lies.”
16: Clause 15, Page 11, line 21, at end insert—
“(7) A decision to enter into a liability limitation agreement between a local auditor and a parish meeting must be taken by the parish meeting itself (and not by its chairman on behalf of the parish meeting).”
My Lords, I shall speak also to the other amendments in this group. These amendments clarify how the audit-related functions in the Bill will sit in the case of a parish meeting where there is no separate parish council. Where new functions are created as a consequence of the local appointment of auditors, the amendments clarify where those functions will sit for a parish meeting. The amendments are relatively minor in nature.
Unlike a parish council, a parish meeting has only one elected member: its chairman. However, all local government electors in the parish are entitled to vote at a parish meeting and are therefore, arguably, members. Where there is no separate parish council, the chairman and the proper officer of the district are together known as the parish trustees, and the parish trustees are the body corporate of the parish meeting.
The principle we have used is that, where a function is of an administrative nature—which is the case in the majority of functions—it would be exercised by the chairman on behalf of the parish meeting. For example, the chairman will be responsible for ensuring that a local government elector may inspect the statement of accounts. This rule is set out in Amendment 36. Where a function is of a deliberative or decision-making nature, it would sit with the parish meeting itself rather than be delegated to the chairman. For example, the decision to appoint an auditor, and the consideration of a report in the public interest, will sit with the parish meeting itself. These exceptions to the general rule are set out in Amendments 16, 44, 45, 48, 53, 68 and 71.
Amendments 15, 19 and 20 would ensure that certain duties that would otherwise be placed on members of the parish meeting are restricted to the chairman and the proper officer of the district and are not placed on all local government electors. These functions include supplying information and attending meetings with the auditor. This approach is consistent with the treatment of parish councils in the Bill, where the functions are placed only on council members and do not extend to local government electors.
Amendments 62 and 69 would remove disproportionately onerous and costly burdens from the chairman of a parish meeting. He will not be required to supply a copy of a report in the public interest to all local government electors. Local government electors will be able to access a report in the public interest or a written recommendation under provisions made in Clause 24. Amendment 34 would insert a definition of “parish meeting” into the Bill and Amendments 42 and 55 would reflect that definition.
Finally, Amendments 60, 63 and 66 are tidying amendments. These are redundant in the light of Section 231 of the Local Government Act 1972, which provides that where a document is to be served on a parish meeting, it should be addressed to the chairman.
I should also make clear to noble Lords that we have discussed these amendments with the smaller authority sector, and I confirm that the National Association of Local Councils is content with them. On that basis, I beg to move.
My Lords, I welcome these amendments. I apologise to the Minister for not being in my place for the previous group of amendments; I had intended to be in the Chamber when she spoke but unfortunately had a guest with me.
I can confirm that this group of amendments seems eminently sensible, particularly as they deal with the very smallest of the parish family, if I can call it that. I welcome the pragmatic approach that has been put forward here.
Perhaps I may say also that, in general, I am much indebted to the noble Baroness, and to her predecessor, for the way in which the amendments were taken from this House after all the consideration that we had, and other things were added in the other place, which on the whole have considerably enriched the Bill. I am extremely grateful for that, and the parish and town council movement—I am proud to be the president of the national association—warmly welcomes the general direction of travel. I therefore welcome this group of amendments, in particular.
My Lords, as we have heard, this group of amendments addresses the application of the Bill to a parish meeting where there is no separate parish council. A parish meeting has only one elected member—its chairman—although it is suggested that all local government electors in the parish who are entitled to vote are members. There are more than 11,000 parish meetings for which the Audit Commission currently appoints auditors.
We accept the necessity of clarifying how various functions created by the Bill should be applied to parish meetings, and the principle adopted—that administrative functions should be exercised by the chairman on behalf of the parish meeting, and deliberative or decision-making functions should be exercised by the parish meeting itself—has our support. We note that NALC supports the amendments, and we do, too.
I am grateful both to the noble Lord, Lord McKenzie, and to the noble Earl, Lord Lytton, for welcoming the amendments. I shall not repeat what I said at the beginning of our consideration of the amendments, but will simply say to the noble Earl that he has echoed my tribute to my noble friend and predecessor Lady Hanham, and I wholly concur with his comments.
Motion on Amendments 15 and 16 agreed.
Motion on Amendment 17
17: After Clause 16, insert the following new Clause—
“Appointment of auditor by specified person
(1) The Secretary of State may by regulations make provision for and in connection with the appointment, by a person (an “appointing person”) specified by the Secretary of State, of a local auditor to audit the accounts of a relevant authority to which the regulations apply.
(2) Regulations under subsection (1) may, in particular—
(a) make provision about the persons that may be specified as an appointing person;
(b) make provision about the procedure for specifying a person and for an appointing person’s specification to come to an end in prescribed circumstances;
(c) make provision about the consequences of an appointing person’s specification coming to an end, including—
(i) for the exercise of functions by the Secretary of State, and
(ii) for the transfer of the person’s rights and liabilities arising by virtue of the regulations to the Secretary of State or another appointing person;
(d) confer functions on an appointing person, including in relation to—
(i) the appointment of local auditors under the regulations,
(ii) the activities of such auditors, and
(iii) the resignation or removal from office of such auditors;
(e) require an appointing person to consult prescribed persons before exercising prescribed functions.
(3) Regulations under subsection (1) may, in particular—
(a) make provision about the relevant authorities to which the arrangements under the regulations apply, including provision for them to apply to an authority that has opted into them or has not opted out of them;
(b) make provision about the procedures to be followed in relation to opting into or out of those arrangements;
(c) impose duties on relevant authorities to which those arrangements apply, including duties as to—
(i) the payment of fees to the appointing person in respect of an audit carried out by a local auditor appointed by that person, and
(ii) the provision of information to the appointing person.
(4) Provision made by regulations under subsection (1) by virtue of subsection (3)(c)(i) may, in particular—
(a) provide for fees to be paid in accordance with a scale or scales of fees specified by the appointing person, and
(b) provide for the payment in prescribed circumstances of a larger or smaller fee than is specified by the appropriate scale.
(5) Regulations under subsection (1) may, in particular, make provision about the functions of a local auditor appointed by an appointing person.
(6) Regulations under subsection (1) may, in particular, make provision for the appointment of a local auditor of the accounts of a relevant authority to which arrangements made by the regulations apply where the appointing person does not make an appointment under the regulations.
(7) Provision made by regulations under subsection (1) by virtue of subsection (6) may, in particular, provide for the appointment to be made by the authority or the Secretary of State.
(8) Regulations under subsection (1) may, in particular provide—
(a) for any provision of, or made under, Part 3 of this Act not to apply, or to apply with modifications, in relation to a relevant authority to which regulations under that subsection apply;
(b) for any other provision of, or made under, this Act not to apply, or to apply with modifications, in consequence of provision made by regulations under that subsection.
(9) Subsection (8) applies to a provision of or made under this Act even if it makes specific provision about a relevant authority to which the regulations apply.
(10) In this section “prescribed” means prescribed by regulations under subsection (1).”
Motion on Amendment 17 agreed.
Motion on Amendment 18
18: Clause 20, Page 14, line 18, leave out from “must” to end of line 23 and insert—
“(a) enter on the accounts a certificate that the auditor has completed the audit in accordance with this Act, and
(b) make a report in accordance with subsection (5).
(5) A report under subsection (4)(b)—
(a) must contain the auditor’s opinion on the accounts, including on the matters in subsection (1) or, as the case may be, subsection (3), but
(b) must not contain the auditor’s opinion on the matter in subsection (1)(c) or (3)(c) if the auditor is satisfied as to that matter.”
My Lords, the amendments in this group make a number of clarifications to Part 5 of the Bill, which sets out the duties of the auditor. Amendment 18 requires the auditors of health service bodies to provide a report on all the matters on which they have a duty to satisfy themselves—other than value for money, where they will have to include their opinion in the report only if they are not satisfied on the matter.
As the Bill stands, the auditor is required to provide a certificate to confirm that the audit has been completed. In practice, auditors of health service bodies already report on all the matters on which they are required to satisfy themselves. The amendment would make this an explicit requirement, in order to provide assurance to the accounting officer and to Parliament that budgets have been used for the purposes intended by Parliament.
Commons Amendments 21 to 23 would clarify the process and timescales for a local elector to make an appeal, following an auditor’s decision not to make an application to the court that an item of account is unlawful. The amendments reflect the current process and provide a local elector with six weeks to require the auditor to provide a statement of reasons for their decision not to apply to the court, and then a further 21 days to appeal the auditor’s decision to the court.
Commons Amendments 24, 25 and 72 would enable local auditors to recover costs for their time in undertaking their main additional statutory audit duties under this Bill, where that work does not result in any formal action being taken. I will explain what the duties are in a moment.
We expect that contracts between authorities and auditors will set out how auditors’ costs are to be recovered. The Bill currently gives auditors an explicit right to recover reasonable costs from the audited body for their time in exercising some of their statutory duties—for example, when undertaking investigatory work that might lead to a public interest report but where, ultimately, one is not issued.
These further amendments enable auditors to recover reasonable costs for their time in investigating—but ultimately deciding not to take action—in relation to three of their statutory functions: first, whether to make an application to the court that an item of account is unlawful; secondly, whether to issue an advisory notice; and, thirdly, whether to apply for judicial review of an authority’s decision. This would ensure consistency in treatment of cost recovery for these functions, enabling local auditors to recover reasonable costs incurred in investigating issues that could result in them exercising their main statutory functions under the Bill.
Commons Amendments 59 and 61 would ensure that the Greater London Authority continues to be supplied with a copy of any public interest report or written recommendation made by the auditor of any of the authority’s functional bodies, following a recently proposed change in the way functional bodies are treated within the Greater London Authority’s group accounts. This change means that functional bodies may not, in future, be considered “connected entities” of the GLA under the Act.
The Bill requires that a copy of a public interest report or written recommendation on a body that is a “connected entity” of a relevant authority should be sent to that authority. However, the proposed change not to include functional bodies within the GLA’s group accounts would mean that they no longer met the definition of a connected entity and so would not fall under this requirement. These amendments therefore ensure that a similar requirement continues to apply to the GLA and its functional bodies, to ensure adequate transparency and scrutiny where such a report or recommendation is made. This is necessary given the close and unique relationship between the GLA and its functional bodies.
Further to this, Commons Amendments 64, 65 and 67 make minor drafting changes needed as a consequence of the Mayor’s Office for Policing and Crime ceasing to be a connected entity of the GLA. They do not change the policy position, but simply correct the drafting of the existing requirement that reports and recommendations on the Met Commissioner are considered by the Mayor’s Office for Policing and Crime.
Commons Amendments 70 and 73 are minor amendments, which apply the definition of “relevant authority concerned” to all the provisions relating to advisory notices, rather than just to paragraph 3 of Schedule 8. The “relevant authority concerned” is defined as the relevant authority to which, or to any officer of which, an advisory notice is addressed. After that comprehensive explanation of this group of amendments, I hope that noble Lords will feel able to accept them. I beg to move.
My Lords, I shall speak specifically to Amendment 18. I refer to the Explanatory Notes on the Commons amendments that have been published, and in particular to that on Amendment 18 in relation to health service bodies, which says that,
“an auditor will have to provide an opinion on value for money only if the auditor is not satisfied in respect of that matter”.
I want to raise the issue of health and well-being boards, which are shared across the health service and local authorities, in terms of identifying how they can work more closely together and how best value can be achieved.
My question is: who audits the health and well-being boards? They have a clear role in driving improved health outcomes. I realise that different bodies are spending money, and are therefore audited for that role, but there is a broader question about how those boards steer policy and make good decisions that reflect acknowledged best practice, and achievements in other areas by other health and well-being boards. I would like to think that an auditor has a clear role in identifying whether value for money is being achieved by individual boards—I suspect that this will become important over the next two to three years, as the success of those boards is assessed—and whether, indeed, the health service investment and the sum of money available to local authorities are adequate for purpose.
To this end, I suggest to my noble friend the Minister that one of the National Audit Office’s thematic studies that are promised as part of the Bill could look at the joining point between local authorities and the health service, specifically in relation to adult social care but more generally in terms of improving health, preventing a decline in health and to reduce inequalities in health outcomes. I think that there is a role for an auditor in that area. An auditor would have to provide only an opinion on value for money if he or she is not satisfied in respect of a specific matter. I think that the issue goes a little further than this. I would like to think that some strongly proactive work would be undertaken by the National Audit Office and auditors who are looking at the role of health service bodies and local authorities’ work in the health field.
My Lords, I thank the Minister for her detailed explanation of the amendments in this group. Our discussion on them has been widened by a very pertinent inquiry from the noble Lord, Lord Shipley. We have generally seen these amendments as tidying up and consequential measures. We have issues around: the duty of auditors of health bodies to prepare a report; the provision of sequencing of electors’ rights concerning unlawful items of accounts; the procedures for auditors to be able to recover costs when there is no formal action they can take; copies of recommendations or public interest reports of functional bodies of the GLA to be sent to the GLA; and the drafting changes arising from the fact that the Mayor’s Office for Policing and Crime will cease to be a connected entity of the GLA. We have gone through these measures and are content with them.
I am very grateful to the noble Lord, Lord McKenzie, for confirming that he is content with these amendments. As regards the query of my noble friend Lord Shipley about the health and well-being boards, the arrangements for reporting on the accounts and the value for money conclusion, I shall give him what I have and, if I need to, perhaps we can follow up the matter after the debate.
The Bill places auditors of both health and local government bodies under a duty to satisfy themselves that the body has made proper arrangements for securing economy, efficiency and effectiveness in its use of resources, which is known as the value for money conclusion. Unlike local government, the accounts of health bodies are consolidated within their sponsor Whitehall department resource account. Local authorities, on the other hand, are directly accountable to the local electorate in a way that health service bodies are not. Because of the different accountability arrangements for health service bodies, the Government consider it necessary to put the requirement to have opinions on the accounts in the Bill rather than in the code of audit practice, to provide assurance to the accounting officer and Parliament that budgets have been used for the purposes Parliament intended. We believe that it is unnecessary to do this for non-health service bodies because of the statutory power for local auditors to apply to the courts for a declaration that an item of account is unlawful. Furthermore, for non-health service bodies, we expect the code of audit practice will set out what auditors must report against this duty, as is currently the position under the code produced by the Audit Commission. Overall, we consider that this allows for greater flexibility in reporting for non-health service bodies, but for health bodies the different parliamentary accounting framework includes a strict requirement for regularity to be reported on.
I have just been reminded that the health and well-being boards are not included under the provisions of the Bill but I hope that what I have just read out has reassured the noble Lord and your Lordships’ House that value for money is very much part of the consideration of the auditors who will be looking at the health and local government bodies.
I have just been passed another note which I hope may be helpful because I am not sure how much of what I have already read out is entirely helpful to the noble Lord. The provisions in the Local Audit and Accountability Bill on value for money inspections do not cover health service bodies. I think we know that. The NAO’s existing powers in relation to value for money inspections are wider than those in the Bill, so the latter does not need to include provision on this in relation to health service bodies. I think that is the killer point that I have finally got to. On the basis of that additional information, I beg to move.
Motion on Amendment 18 agreed.
Motion on Amendments 19 to 25
19: Clause 21, page 15, line 28, at end insert—
“(8A) A local auditor of the accounts of a parish meeting may only exercise the function in subsection (7), so far as it applies to a person who is or was a member or officer of a relevant authority, in relation to a person who is or was the chairman of the parish meeting or the proper officer of the district council within whose area the parish lies.”
20: Clause 22, page 16, line 14, at end insert—
“(4A) Subsection (3) does not apply in relation to a parish meeting unless the offence is alleged to have been committed by the chairman of the parish meeting or the proper officer of the district council within whose area the parish lies.”
21: Clause 27, page 19, line 6, leave out from “may” to end of line 7
22: Clause 27, page 19, line 8, after “(a)” insert “within the period of 6 weeks beginning with the day after that on which the person is notified of the decision,”
23: Clause 27, page 19, line 9, after “(b)” insert “within the period of 21 days beginning with the day after that on which the person receives those written reasons,”
24: Clause 27, page 19, line 16, at end insert—
“(5A) Subsection (5B) applies if a local auditor of the accounts of a relevant authority incurs costs in determining whether to make an application under this section in relation to the authority, but the application is not in fact made.
(5B) The local auditor may recover the reasonable costs so incurred from the relevant authority.”
25: Clause 30, page 20, line 9, at end insert—
“(5) Subsection (6) applies if a local auditor of the accounts of a relevant authority incurs costs in determining whether to make an application under this section in relation to the authority, but the application is not in fact made.
(6) The local auditor may recover the reasonable costs so incurred from the relevant authority.”
Motion on Amendments 19 to 25 agreed.
Motion on Amendment 26
26: After Clause 38, insert the following new Clause—
“Access to local government meetings and documents
(1) The Secretary of State may by regulations make provision for and in connection with allowing persons—
(a) to film, photograph or make sound recordings of proceedings at a meeting of a body to which this section applies, or of a committee or sub-committee of such a body;
(b) to use other means for enabling persons not present at such a meeting to see or hear proceedings at the meeting, as it takes place or later;
(c) to report or provide commentary on the proceedings at such a meeting, orally or in writing, so that the report or commentary is available, as the meeting takes place or later, to persons not present at the meeting.
(2) Regulations under subsection (1) may in particular make provision—
(a) for allowing persons to make available to the public or a section of the public using any medium (including the internet) things produced as a result of activities within that subsection;
(b) about the facilities to be made available by bodies to which the regulations apply to enable persons to carry on such activities;
(c) about the steps to be taken by persons before carrying on such activities;
(d) about the circumstances in which persons may not carry on such activities, including for enabling a person specified in the regulations to prevent them from doing so in the circumstances specified in the regulations.
(3) The Secretary of State may by regulations make provision—
(a) for requiring written records to be kept of decisions that are of a kind specified in the regulations and are taken by an officer of a body to which this section applies,
(b) with respect to the information that is to be included in those written records (including information as to the reasons for any decision);
(c) for requiring any such written records, or any documents connected with the decisions to which they relate, to be supplied or made available to members of the body, to the public or to other persons;
(d) for the creation of offences in respect of any rights or requirements conferred or imposed by the regulations.
(4) The Secretary of State may by regulations provide that any of the following may or must be given or made available by electronic means—
(a) any notice which is required by the Public Bodies (Admission to Meetings) Act 1960, Part 5A of the Local Government Act 1972 (access to meetings and documents of certain authorities etc) or regulations under this section to be given by a body to which this section applies;
(b) any document relating to such a body which is required by that Part or those regulations to be open to inspection.
(5) Regulations under this section may, in particular, amend or repeal any provision of—
(a) the Public Bodies (Admission to Meetings) Act 1960,
(b) Part 5A or section 228 (inspection of documents) of the Local Government Act 1972, or
(c) section 58 of the Greater London Authority Act 1999 (application of Part 5A to the London Assembly).
(6) Subject to subsections (7) and (8), this section applies to—
(a) a district council,
(b) a county council in England,
(c) a London borough council,
(d) the London Assembly,
(e) the Common Council of the City of London in its capacity as a local authority or police authority,
(f) the London Fire and Emergency Planning Authority,
(g) Transport for London,
(h) a joint authority established under Part 4 of the Local Government Act 1985,
(i) an economic prosperity board,
(j) a combined authority,
(k) a fire and rescue authority in England constituted by a scheme under section 2 of the Fire and Rescue Services Act 2004 or a scheme to which section 4 of that Act applies,
(l) a National Park Authority for a National Park in England, (m) the Broads Authority,
(n) the Council of the Isles of Scilly,
(o) a parish council, and
(p) a parish meeting.
(7) In its application to subsection (1), subsection (6) is to be read as if it included a reference to an executive of an authority within paragraph (a), (b) or (c) of that subsection.
(8) In its application to subsection (3), subsection (6) is to be read as if the reference in paragraph (d) to the London Assembly were to the Greater London Authority.
(9) References in this section to a committee or sub-committee of a body include any committee or sub-committee of that body to which Part 5A of the Local Government Act 1972 applies or is treated as applying.
(10) References in this section to Part 5A of the Local Government Act 1972 include a reference to that Part as it applies to the London Assembly by virtue of section 58 of the Greater London Authority Act 1999.
(11) In paragraph 4(2) of Schedule 12 to the Local Government Act 1972 (notice of meeting of principal council), for “Three clear days” substitute “Five clear days”.”
My Lords, in moving the Motion on Amendment 26, I shall speak also to the other amendments in this group.
Noble Lords will be aware that these are new provisions. These amendments insert a new clause into the Bill that would give greater rights to report at local government meetings and to have access to documents. We believe that this is an important extension to reflect greater enthusiasm and appetite among the public not just for transparency but also to have an element of control over the information and the access that they enjoy which allows them to continue discussion and debate beyond being just observers at meetings.
Commons Amendment 26 gives the Secretary of State the power to make regulations that would allow members of the public to report proceedings at public meetings, allowing people to film, audio-record, tweet and blog at a meeting of a local government body. This will allow those who are unable to attend the meeting to follow the proceedings and, as I have just said, perhaps promote discussion about proceedings thereafter. It will also give the public access to documents of local government bodies. These documents may, for instance, include records of decisions taken by officers acting under delegated powers; the reasons for the decisions, details of any alternative options considered and rejected, and any other documents connected with the decisions to which they relate.
The regulations may set out possible conditions to be met before such activities can be carried out. Likewise, they may specify the circumstances where activities such as filming or audio recording might not be permitted. The Government intend to work with partners such as the Local Government Association and the National Association of Local Councils on the detail of the regulations. They will be subject to the affirmative procedure if there is provision in the regulations amending or repealing primary legislation; otherwise the regulations will be subject to the negative procedure.
Local people are currently enjoying more rights under the Local Authorities (Executive Arrangements) (Meetings and Access to Information) (England) Regulations 2012 when they attend meetings of a council’s executive and access information relating to decisions made in those meetings. Unfortunately, these same people cannot enjoy the same rights when they attend the public meetings of full council, its committees, sub-committees and joint committees, parish and town councils and other local government bodies. Some councils have used this inconsistent approach to refuse the public access. We are aware of some recent examples of councils ejecting members of the public from meetings for filming or tweeting from those meetings. That is why we have decided to bring forward these amendments now.
Since the 2012 regulations came into force, we are not aware that they have caused any particular problem for local authorities, other than some needing to update their standing orders to reflect the change in access rights by the press and public. We do not believe that this greater access should create additional burdens. However, I am aware that some may be concerned about the possible disruption that filming in council meetings might cause. Therefore, we will consider possible steps that have to be taken by people attending the meeting for the purpose of reporting the proceedings so that activities such as filming or taking photographs might not disturb the good order and conduct of a meeting. As I say, we intend to work with partners to ensure that the regulations and any guidance address this.
We are in a digital age where technology has significantly evolved and we need to acknowledge that it will continue to advance swiftly. With this in mind, we must widely embrace the use of modern communication methods such as filming, tweeting and blogging at public meetings. On top of this, opening up these bodies would help the public to have a better understanding of their local decision-making process and, as I said, potentially encourage them to be more involved in local affairs. I beg to move.
My Lords, I expect we all welcome the intentions of the amendments: I certainly do. I must confess that my first response when I read about this was a little surprise that they were considered necessary. I am sure the vast majority of authorities of all persuasions are already doing this. It may well be that, in some cases, their standing orders have not been brought up to date, but I am sure that most are doing it very willingly. However, I then reflected on my early days as a councillor, quite a long time ago, when all council and committee meetings were open to the public, as required—if I remember rightly—by a Private Member’s Bill introduced by the then new and young honourable Member for Finchley, Mrs Thatcher. The one committee not open to the public was what was then called the planning committee; it would now probably be the development control committee. This was, arguably, the committee of greatest interest to members of the public but it was the one to which they were not allowed access.
Those days are, fortunately, long gone but it reminded me that we need to ensure we keep up to date with the times. I am sure all noble Lords welcome the good intentions of these amendments. The key will be in the drafting of the regulations. I am not sure why any local authority or council would wish to stop someone tweeting during a meeting or, if they did, how they could implement it without the most draconian measures. That is well and good, but the difficult part will be making regulations that require the greatest openness but do not allow the avoidable disruption of meetings.
I hesitate a little, because a fundamental part of our democracy is the right to be irritating and to annoy. I think the noble Lord, Lord Beecham, is suggesting that I am doing this at the moment. We all know from our local authority experience that there are some people whom everyone agrees are simply a nuisance. It will be quite tricky to balance the regulations to ensure that the person—it is usually an individual rather than a collection—has a right to be a nuisance and be irritating but does not disrupt the good order and procedure of the meeting. I imagine that the decision will be in the hands of whoever is chairing the meeting. They have the right now to have disruptive people ejected, as happens occasionally, and this will, no doubt, still be the case. However it will be quite difficult to draw the balance between allowing the maximum openness and transparency at meetings, which we would all endorse, with not allowing individuals —I stress, individuals—with a cause from unnecessarily and avoidably disrupting proceedings.
We look forward with interest to seeing the regulations. I am delighted that the Minister has made clear that there will be wide consultation with the local government associations, NALC and other bodies in the drawing up of these. We look forward to seeing the result.
My Lords, I relate to what the noble Lord, Lord Tope, has just said. I have a mental image of the small parish or town council, with its quite limited premises, taking on progressively more functions and finding itself in the centre of some awfully controversial measure. The premises might, quite literally, be crowded out by people with cameras or wanting to record: the sort of thing one sees on television outside the courts of justice when a person of fame—or infamy, as the case may be—has received a decision. The scrum that goes on out there is the sort of thing that slightly worries me, particularly, for the reasons given by the noble Lord, Lord Tope, with development control, which in many instances is highly contentious.
I will not ask the Minister for an answer at this juncture, but could she bear in mind that uniformity of regulations across the whole of local government might be difficult to achieve, for the reasons given by the noble Lord, Lord Tope? There is also a question of how open-ended this public right is. There will clearly be instances—I am sure we have all witnessed meetings of this sort—where it can be thoroughly disruptive and an impediment to the sober and conscientious consideration of matters on the agenda. Perhaps there must be some limitations. Like the noble Lord, Lord Tope, I look forward to seeing the draft regulations in due course. I appreciate what the Minister has said about the process for that: would she perhaps clarify the timescale for it? That would be very helpful, particularly for parish and town councils, a bigger proportion of which may be affected by this measure than principal authorities which, in many cases, already have generous facilities for public access and the recording of proceedings.
My Lords, I occasionally encounter some unfortunate being who has apparently had nothing better to do than watch me on Parliament TV. It is possible that others of your Lordships may have had similar encounters. Oddly enough, although Newcastle City Council—on which both I and the noble Lord, Lord Shipley, have served—has webcast its meetings for many years, nobody has ever claimed to have seen me on those broadcasts. Perhaps that says something about the medium not quite having conveyed the message thus far.
I join my honourable friends in the House of Commons in welcoming these changes. It is fair to say, and was said by the Minister in the debate on this provision in the Commons, that the Opposition Front Bench there were very supportive of the concept. It is welcome that these proposals come here and, as the Minister pointed out, that they include the potential for safeguards. I presume that these will, as she has implied, be negotiated, or at least discussed, with the Local Government Association so as to avoid conduct which might disrupt meetings and to provide clarity about what happens when, for legitimate reasons, the press and public may be excluded. Examples might be if there are matters of commercial confidentiality or confidential personal details to be discussed in certain areas. I might like to suggest, though it may not reach into regulations, that selfies might be prohibited, but that is a matter of taste rather than democracy.
It would also be helpful if, alongside any regulations, the Government gave some information, in guidelines or otherwise, about the risks that may be attendant on people filming, tweeting or otherwise relaying actual events. Although one hopes it would not happen, what is said in council may sometimes stray into the area of defamation and those relaying matters of that sort could find themselves in a difficult situation. Some guidance about the need to be careful would help those who might otherwise run into difficulties. It is not likely to arise in a large number of cases but it is conceivable it might happen. Broadcasting authorities and so on are very alert to that danger. In Parliament it is privilege but that does not apply to local authorities.
I also wonder, although it is not a matter for the Minister or the Department for Communities and Local Government, whether the principle embodied in these amendments, which will eventually be subject to guidelines, might not be extended to some other public bodies. For example, the noble Lord, Lord Shipley, referred to health and well-being boards. It is true that they are technically part of local authorities, but health is generally a matter that clearly engages the interest of a community. Many bodies such as clinical commissioning groups, health trusts and so on are open to the public. A similar regime might be useful there, and perhaps the noble Baroness can take back to ministerial colleagues the thought that this principle—after it has run for a period and people can see how it works—may usefully be extended.
I find some irony in the Government’s general position on this issue. They talk about democracy when, at the same time, they are not only imposing a council tax cap on local authorities which can be exceeded only if there is a referendum, they are also intending to impose a lower cap than would otherwise be the case because some authorities have levied just under the prescribed level for a referendum. The Government seem to be taking an absurd position. Indeed, at least part of the coalition appears increasingly to favour referendums over elections. In this House we will be debating at some length the proposals regarding European referendums. This process was started by Louis Napoleon in the 19th century and has since been extended to various other unsatisfactory regimes.
However, the current proposals are regarded as potentially helping to revive interest in the established local democratic process. That is necessary given—as many of us have remarked during the debates on the Bill—the almost total lack of coverage of local affairs not just by the printed press but by the media generally compared with what used to be the case. If that lack of coverage means that people are unable to read such coverage in their local paper or see it on the local broadcasting media then it would be useful if this information could be disseminated from meetings. I hope that people will take advantage of that opportunity as it can only be for the good of local democracy. We support the amendments.
I am grateful to the noble Lord for his and the Opposition’s support for these amendments. I am also grateful to have been reminded by my noble friend Lord Tope that I am following in the proud tradition of my late and noble friend Lady Thatcher in terms of increasing access to public meetings.
As my noble friend Lord Tope pointed out, many local authorities now provide the kind of access and opportunity to local people in the way that we are seeking to require through these measures. He is right, there is extensive use and availability in this area. However, some local authorities are not providing that kind of access. As we think that that is important and the precedent is there in other kinds of public meetings, it is only right to extend such provisions. For example, I am told that Tower Hamlets Council barred a 71 year- old resident from filming because it claimed a risk of reputational damage to the authority. Keighley Town Council blocked some residents from filming as it would have amounted to a breach of standing orders. Stamford Town Council placed a ban on journalists tweeting from meetings due to the risk that the journalists would not accurately portray the debate. So there are examples and evidence of inconsistency in approach and we want to address that.
Noble Lords raised important points about risks, and the measures necessary to mitigate those risks, to ensure that proper conduct is able to continue. I re-emphasise that we will carry out a process of consultation on these regulations and ensure that we take account of the points that have been made. We will not lay the regulations until we have completed that consultation. However, we are talking about a matter of months in terms of bringing those regulations forward. We do not want delay on this.
The noble Lord, Lord Beecham, specifically raised concerns about whether guidance will be issued on matters such as defamation in order that members of the public do not inadvertently put themselves at risk. Alongside the regulations, we intend to produce guidance to cover such matters. As the noble Lord will know, there is some precedent in this area because journalists are now allowed to “live tweet” from some public court proceedings.
The noble Lord specifically asked whether this provision may be extended to other public bodies such as health bodies. I will take his point away and raise it with colleagues. We believe that if a public meeting provides access to the public we should ensure that they have the ability to record it appropriately, in the way that I have described.
That leads me to another point that my noble friend Lord Tope and others mentioned regarding the ability to maintain sensitivity and confidentiality during public meetings. Councils and other government bodies will still be able to exclude the public from the part of a meeting in which confidential or exempt sensitive information will be disclosed. The definition of confidential and exempt information is already covered in legislation. There are legislative rules that must be followed when excluding the public from a meeting. For instance, a resolution may be passed to exclude the public from a meeting at which exempt information would be disclosed. Again, measures are already there to inform on how we propose to operate in this area.
I think that I have covered all the points that have been raised. I re-emphasise that we will bring forward regulations and ensure that we consult. I am very much aware of the kind of concerns that have been raised by noble Lords and will ensure that proper account is taken of these issues when the regulations are drafted.
Motion on Amendment 26 agreed.
Motion on Amendments 27 to 29
27: Clause 39, page 26, line 30, at end insert—
“(13A) Subsections (14) to (16) apply (and subsections (18) to (20) do not apply) if, in accordance with section 46(2A), this section comes into force on the day on which this Act is passed.”
28: Clause 39, page 26, line 35, after “may” insert “, in particular,”
29: Clause 39, page 26, line 46, at end insert—
“(17) Subsections (18) to (20) apply (and subsections (14) to (16) do not apply) if this section comes into force on a day appointed by the Secretary of State by order under section 46(2A).
(18) Section 52ZC of the Local Government Finance Act 1992 applies with the following modifications to the determination of a set of principles for the financial year beginning with 1 April 2015.
(19) The Secretary of State may, in particular, determine categories of authority for that financial year—
(a) on the basis of whether an authority’s relevant basic amount of council tax for the financial year beginning with 1 April 2013 would have been excessive if that amount for that year and for the immediately preceding financial year had been determined under section 52ZX of the Local Government Finance Act 1992 as amended by this section,
(b) on the basis of whether an authority’s relevant basic amount of council tax for the financial year beginning with 1 April 2014 would have been excessive if that amount for that year and for the immediately preceding financial year had been determined under that section as so amended, or
(c) on the basis set out in paragraph (a) and on the basis set out in paragraph (b).
(20) In subsection (3)(b) of section 52ZC the reference to an authority’s relevant basic amount of council tax for the financial year immediately preceding the year under consideration is to the amount that would have been calculated by the authority for that year under section 52ZX of the Local Government Finance Act 1992 if the amendments made to it by this section had been in force for that year.”
My Lords, I beg to move that this House do agree with the Commons in their Amendments 27 to 29 en bloc. I shall speak also to the other amendments in this group.
These amendments would provide advance certainty to local government over timings, so they can be confident that any delay in Parliament will not impact on their budget-setting timetable.
Commons Amendments 27, 37, 39 and 40 provide that if the Bill is passed by 5 February, the likely date by which the referendum principles for 2014-15 must be laid before Parliament, the clause takes effect immediately. If not, the changes would take effect by order and relate to the financial year 2015-16. Commons Amendment 29 gives detail of the changes required if the clause was to be commenced by order and relate to 2015-16. This includes amending transitional provisions to ensure that council tax comparisons could be made on a like-for-like basis between 2014-15 and 2015-16.
Commons Amendment 28 is a minor amendment to clarify that the current clause does not reduce the existing discretion of the Secretary of State when determining categories of authority for 2014-15.
These amendments were proposed at Report in the other place as a precautionary measure to remove a risk that local authority budgeting could be adversely impacted in the event of any delay to the Bill. The Bill has not been delayed to date and, subject to the decisions of your Lordships’ House today, is on track to reach Royal Assent well before local authorities begin setting their budgets. If this remains the case, barring the minor clarification of Amendment 28, this group of amendments would not alter the operation of the clause from the version first introduced into this House.
With this explanation, I hope noble Lords will see fit to accept the amendments.
My Lords, could I make a brief point about Amendment 27 and the group as a whole? It relates to the issue of principle, which it is important that we restate. I do not like centrally imposed targets for increases in local taxation. The reason is simply this: there is a principle that localism means local decision-making, and those who are elected at local elections should make those decisions. We have various definitions now of what is seen to be relevant expenditure. Is it spending power? If you compare spending power to the amount of government grant, or to the amount of money paid on average by council tax payers or at band D by council tax payers, you get very different sums. In the end, we are reliant on the ballot box in each council area to decide who represents a ward, who then come together and make decisions about how that council is to be run. In my view, that includes the level of council tax.
I understand that we have debated that before and that debate has no doubt been held in the other place. I hope that somebody will decide to hold a referendum on the issue of council tax and the proposal that there should be a higher increase than the amount that the Secretary of State would prefer.
Therefore, this remains an issue of principle: local authorities are the people who should decide the level of council tax and they should be responsible to their electors, on the principle of localism. They will stand or fall at their ballot boxes by the decisions that they themselves take.
My Lords, this amendment takes us back to the thorny issue of council tax at referendums. We have just heard from the noble Lord, Lord Shipley, about his opposition to centrally imposed targets; he has been very consistent on that issue. The fundamental policy change provided for in the Bill is the inclusion of the definition of a relevant amount of council tax—certain levies. Previously, any increase in council tax resulting from an increase in levies could not have caused a determination that the level of council tax was excessive, and would not have triggered a referendum requirement.
Debates in your Lordships’ House and in the other place highlighted a number of concerns, namely that the referendum regime places the burden on major preceptors and billing authorities who have no direct ability to influence the amount of the levy or to cause a levy body to reduce its levy; that factoring in 2013-14 council tax increases into referendum criteria introduces an element of retrospection potentially penalising authorities for decisions made before the Bill was introduced; and that it would undermine certain infrastructure projects that relied on an increase in levy stream and that were negotiated as part of a city deal. The example of Leeds has been cited in this regard.
These concerns have not been met, either in the other place or by the amendments before us today. As we have heard, the amendments provide an alternative route to the council tax at referendums coming into force, as originally envisaged on Royal Assent, or by order. Which route is taken depends upon whether or not Royal Assent is received by 5 February; that is the date by which the referendum principles should be put to Parliament for approval. We hear from the Minister that it is quite likely that Royal Assent will be received by that date; I doubt whether anything this evening will disrupt that judgment. Should Royal Assent be received after that date, the referendum provisions will operate from 2015, rather than April 2014. However, even if they do so, that does not help with the concerns over retrospection. The amendments make clear that the Secretary of State can determine categories of authority for that year based on whether their increases in either the year beginning 1 April 2013 or 1 April 2014 or both were deemed excessive on the new principles. Frankly, this does not leave a very satisfactory state of affairs.
We have been tempted to amend the amendments at least by removing the April 2013 date from proposed new Clause 39(19)(a), but—particularly as this looks increasingly now to be just a precautionary amendment —we consider that for the time being the issue has been debated enough, so we will not resist these amendments.
My Lords, I am grateful to the noble Lord, Lord McKenzie, for his final statement in confirming that the Opposition will not resist these amendments. In response to comments made both by the noble Lord, Lord McKenzie, and my noble friend Lord Shipley, I remind your Lordships that the coalition agreement committed the Government to remove capping and to bring in a fairer system of addressing excessive council tax increases. Parliament agreed the principle of removing the old capping regime and instead giving local people the final say on excessive increases during the passage of the Localism Act 2011. The time to debate whether that was the correct approach was then and not now.
As far as timing is concerned, subject to your Lordships agreeing these amendments today, we hope to have Royal Assent as soon as possible. While that is of course a matter for the Crown, we envisage that we should have it in time for the changes to the council tax referendum provisions to take effect for the 2014-15 financial year. Those principles will be announced in due course.
I do not agree with the point put forward by the noble Lord, Lord McKenzie, about the issue of including levies being a retrospective provision. The Secretary of State considers all relevant factors when setting referendum principles and that always includes past council tax-setting decisions. That was done for 2013-14 when he gave low-spending authorities the ability to set a £5 council tax increase, even if that meant a percentage rise above 2%. This provision simply makes it clear that he can take into account changes in levies in 2013-14 and 2014-15 when setting next year’s principles.
The Government were clear before council tax and levies were set for 2013-14 that they might take account of council tax decisions in setting future principles. No change will be made to the money raised in 2013-14 and both authorities and levying bodies can plan for 2014 accordingly. Local tax payers deserve fair and equal treatment no matter where in England they live. There must be measures to protect taxpayers from excessive increases brought in through the back door by a small number of authorities without seeking local agreement.
I clearly hear the arguments that have been put forward today but I am afraid that we beg to differ. The clause and the principle of including levies in the calculation of what constitutes an excessive council tax increase has now been debated at length in both Houses and approved. The principle and practicalities of holding council tax referendums were agreed in 2011 via the Localism Act. The amendments before us do not alter them. They were proposed to ensure that local authorities were not disadvantaged by any delays in the Bill becoming law. As I said, the referendum principles will be announced in due course, but we believe that authorities should not wait for them to be published. They should look to freeze council tax levels next year and we have made funds available to support them in doing so. I beg to move.
Motion on Amendments 27 to 29 agreed.
Motion on Amendment 30
30: After Clause 39, insert the following new Clause—
“Parish meetings: parish polls
(1) In Part 3 of Schedule 12 to the Local Government Act 1972 (procedure in parish meetings), paragraph 18 is amended as follows.
(2) Omit sub-paragraphs (4) to (6).
(3) At the end insert—
“(7) A poll may be demanded before the conclusion of a parish meeting on any question arising at the meeting, subject to regulations made under sub-paragraph (8).
(8) The Secretary of State may by regulations make provision about polls consequent on parish meetings, in particular about—
(a) the questions arising at a meeting on which a poll may be demanded,
(b) the circumstances in which a poll may or must be taken (including provision as to the number of local government electors who must demand a poll for a poll to be taken), and
(c) the conduct of a poll.
(9) Regulations under sub-paragraph (8)(c) may apply any electoral enactment (with or without modifications) to polls consequent on parish meetings.
(10) In sub-paragraph (9) “electoral enactment” means an enactment which relates to elections or referendums.
For that purpose, “enactment” includes an enactment contained in subordinate legislation as defined in section 21(1) of the Interpretation Act 1978.
(11) A statutory instrument containing regulations under sub-paragraph (8) is subject to annulment in pursuance of a resolution of either House of Parliament.”
(4) In section 243 of that Act (computation of time and timing of elections, etc)—
(a) in subsection (2) for “rules under paragraph 18 or” substitute “regulations under paragraph 18 or rules under paragraph 34”,
(b) in subsection (4) before “rules” (in both places it occurs) insert “regulations or”, and
(c) in subsection (5) before “rules” (in both places it occurs) insert “regulations or”.”
I shall speak also to Amendment 103. These amendments would modernise the arrangements that govern parish polls. I am grateful to the noble Earl, Lord Lytton, for bringing the much-needed modernisation of parish polls to the House’s attention when the Bill was last in this place. I understand, although I was not here at the time, that he had widespread support from other noble Lords. I am also grateful to the Members of the other place who consented to widen the scope of the Bill to allow the addition of these amendments.
Commons Amendment 30 gives the Secretary of State power to make regulations regarding parish polls. The clause specifies that regulations may cover arrangements for the conduct of a poll; the subject matter on which a poll may be held; and the circumstances in which a poll may or must be taken. So, in line with the noble Earl’s proposed amendment, this amendment will enable regulations that more tightly define what constitutes a legitimate topic for a poll and which raise the trigger threshold. On top of this, we will also modernise the voting arrangements to increase participation in polls by, for example, extending voting hours and allowing postal voting. Amendment 103 simply updates the Bill’s Long Title to reflect the inclusion of the new clause.
We are taking this action because we believe that parish polls are an important democratic tool that allows a parish council to get a clear indication of local opinion about a local matter. We want to protect that. However, as the noble Earl, Lord Lytton, outlined to the House last year, the current rules that govern the trigger and subject matter allow for individuals to abuse them by holding polls unrelated to the local area, at substantial cost to local tax payers. This has led to some individuals vexatiously pursuing particular agendas, with large financial consequences for parish councils. What is more, the present rules can also operate as barriers to participation, particularly as voting can take place only between the hours of 4 pm and 9 pm and there are no provisions for postal or proxy votes.
The new measures will make this important democratic process fit for purpose in the modern world. They will ensure that parish polls enable local communities to have a voice on issues that directly relate to parish matters. They will increase participation by updating the archaic arrangements for the conduct of a poll and guard against vexatious misuse. We will consult widely on the content of the regulations, which will be subject to the negative procedure. It is our aim to launch a scoping exercise in the spring, followed by a formal consultation process. We hope to work closely with the noble Earl and sector-led bodies, such as the National Association of Local Councils, in that work. I beg to move.
I particularly welcome this amendment for all the reasons recited by the noble Baroness. I think that it will substantially modernise, improve and streamline the work of parish councils and make them more open, without having the negative impediments that have previously been associated with parish polls. I very much welcome this. In doing so, as I expressed when this was before us previously, I thank other noble Lords who supported this; the noble Baroness’s predecessor, the noble Baroness, Lady Hanham, who readily took this away; and the Bill team for the work that it did to fashion it and get it approved by the other place. I warmly welcome this measure for all the reasons given. It is very much a success all round, for which I claim only minority credit for having raised the matter in the first place.
My Lords, we should thank the noble Earl, Lord Lytton, for raising this matter in the first place, and he should certainly claim a substantial amount of credit for it. He regaled us in Committee with some of the anomalies and archaic processes concerning parish meetings. Voting only between 4 pm and 9 pm with no provision for proxy or postal voting is hardly the stuff of inclusion. The noble Earl was convincing on the need to modernise arrangements, and the Government responded by providing for the Secretary of State to have the power to make regulations about the conduct of parish polls. We consented in the other place, as the Minister acknowledged, in widening the scope of the Bill to facilitate this.
The Government gave undertakings in another place—they have been reiterated tonight—about continued collaboration with the National Association of Local Councils and with the noble Earl, and we trust that the promised wide consultation on draft regulations will now proceed apace. This is an opportunity, as has been said, to provide a method for local communities to have a voice on issues directly related to parish matters, and it has our support.
My Lords, I am grateful to the noble Lord, Lord McKenzie, for his support for these amendments and I certainly join him in paying tribute to the noble Earl for all his work on the matter. I have nothing further to add but my thanks to all noble Lords for allowing us to respond so constructively to this proposal from the noble Earl.
Motion on Amendment 30 agreed.
Motion on Amendments 31 to 34
Moved by Baroness Stowell of Beeston
That this House do agree with the Commons in their Amendments 31 to 34.
31: Clause 40, page 27, line 29, at end insert—
“(fa) regulations under section (Appointment of auditor by specified person) (appointment of auditor by specified person),”
32: Clause 40, page 27, line 30, at end insert—
“( ) regulations under section (Access to local government meetings and documents) which amend or repeal any provision of an Act,”
33: Clause 41, page 28, line 44, leave out from ‘auditor”’ to end of line 45 and insert “has the meaning given by section 4(1)(b);”
34: Clause 41, page 29, line 4, at end insert—
““parish meeting” means a parish meeting of a parish which does not have a separate parish council;”
Motion on Amendments 31 to 34 agreed.
Motion on Amendment 35
Moved by Earl Attlee
That this House do agree with the Commons in their Amendment 35.
35: Clause 41, page 29, line 21, at end insert—
“(2A) References in this Act to provision made under it include provision made under Part 42 of the Companies Act 2006 as it has effect by virtue of Schedule 5.”
I shall speak also to Amendments 47, 49, 50, 51, 52, 54, 56, 57 and 58, which relate to the eligibility and regulation of auditors in the new local audit framework.
Commons Amendments 35, 47, 49, 54, 57 and 58 are all minor and technical tidying-up amendments. Amendment 35 would ensure that references throughout the Bill to subordinate legislation made under it will cover Part 42 of the Companies Act 2006, as applied by Schedule 5 to the Bill. This means that provisions on eligibility and regulation will be included whenever the Bill refers to subordinate legislation. Amendment 47 would insert a new subsection that will apply explicitly to Sections 1288, 1289, 1290 and 1292 of Part 42 of the Companies Act 2006 in relation to local audit. These sections set out how regulations and orders under the Companies Act are to be made.
Amendment 49 corrects a drafting error in order to mirror accurately the obligations under Schedule 10 to the Companies Act 2006. Amendment 54 makes a minor change to ensure that the definition of local auditor used in the Companies Act 2006, as modified and applied to local audit, refers to the correct clause in this Bill. Amendments 57 and 58 ensure that a body to which the Secretary of State’s functions are delegated under Schedule 5—which we expect to be the Financial Reporting Council—can be audited by either a statutory auditor or a local auditor.
Amendments 50, 51 and 52 together specify which existing professional qualifications will be considered as appropriate qualifications for local audit in the new framework. This will ensure that individuals qualified under the Audit Commission Act 1998 will continue to be able to undertake local audit in the new regime. We had previously intended to set this out in regulations. However, to provide clarity and certainty, it will be helpful to put it in the Bill.
Amendment 56 further modifies Schedule 10 to the Companies Act 2006, as applied by Schedule 5 to this Bill, in respect of individual auditors qualified in other EEA countries. It has two main effects in respect of these individuals. First, it will enable the recognised supervisory bodies for local audit to recognise the qualifications of those individual auditors who hold the equivalent of a UK local audit qualification obtained elsewhere in the European Economic Area. Secondly, it specifies that recognised supervisory bodies can require an EEA individual statutory auditor to pass an aptitude test only if he or she is seeking to establish himself or herself in the UK on a permanent basis as a local auditor. These changes are necessary to comply with the requirements of directive 2005/36/EC on the recognition of professional qualifications. Paragraph 6 of Schedule 10 to the Companies Act 2006 sets out that one of the requirements for a firm to be eligible for appointment as a local auditor is that it is controlled by qualified persons. Amendment 56 ensures that a firm is qualified if it is eligible for appointment as a local or statutory auditor, or is eligible for a corresponding appointment.
With these clarifications, I beg to move.
My Lords, I thank the Minister for his explanation of this quite large group of amendments. I believe they cover quite minor and technical matters. Generally, we have no issues to raise on them. When I was first going through the amendments, I did wonder about Amendments 51 and 52, which replace the power of the Secretary of State to make regulations with provisions in the Bill. As the noble Earl explained, this is to do with which existing qualifications will be recognised. It is unusual for Governments to take something from regulations and put it in a Bill, but I understand the rationale.
Amendment 56 clarifies that no aptitude test is required if an individual is providing services on a temporary or occasional basis, and it is accepted that this is to be judged by reference to duration, frequency, regularity and continuity. The Minister will be relieved to know that I do not intend to press further detailed explanations of how those terms might be interpreted. We have no further points to raise on this group of amendments.
Motion on Amendment 35 agreed.
Motion on Amendments 36 to 40
36: Clause 41, page 29, line 48, at end insert—
“(7A) Any function conferred or imposed on a parish meeting under or by virtue of this Act, other than a function expressly conferred on the parish meeting itself, is exercisable by the chairman of the parish meeting acting on behalf of the authority.”
37: Clause 46, page 31, line 3, leave out “and” and insert “to”
38: Clause 46, page 31, line 4, leave out “Section 38 comes” and insert “Sections 38 and [Access to local government meetings and documents] come”
39: Clause 46, page 31, line 5, at end insert—
“(2A) If this Act is passed before 5 February 2014, section 39 comes into force on the day on which this Act is passed; otherwise that section comes into force on such day as the Secretary of State may by order appoint.”
40: Clause 46, page 31, line 8, leave out paragraph (a)
Motion on Amendments 36 to 40 agreed.
Motion on Amendment 41
41: Clause 47, page 31, line 40, leave out subsection (2)
Motion on Amendment 41 agreed.
Motion on Amendment 42
42: Schedule 2, page 37, line 16, leave out from “meeting” to end of line
Motion on Amendment 42 agreed.
Motion on Amendment 43
43: Schedule 2, page 37, line 36, leave out paragraphs (a) and (b) and insert “that is wholly in England”
My Lords, Amendment 43 removes internal drainage boards which are partly in England and partly in Wales from the local audit provisions in the Bill. There are two such internal drainage boards: Powysland and Lower Wye. Both are mainly in Wales but currently fall under the Audit Commission regime. Last November, the Welsh Government announced their intention to transfer the functions of the two cross-border IDBs, along with the functions of one IDB that is wholly in Wales, to Natural Resources Wales, and to bring them under the Welsh audit system. The Welsh Government subsequently supported a legislative consent Motion to make audit arrangements for these two bodies under this Bill as a stopgap measure until the new governance arrangements are in place. However, the legislative consent Motion was not passed by the National Assembly for Wales. In line with the devolution settlement, the amendment therefore removes these two bodies from Schedule 2. Schedule 2 lists the relevant authorities that would fall under the new audit regime.
It is the Welsh Government’s intention that the new governance arrangements will be in place by the time the Audit Commission is abolished, by 2015, and preparations for this are in hand. The Welsh Government are also working with Defra to agree a way forward with regard to the future management of the areas in England covered by the two cross-border internal drainage boards. Both cross-border bodies will continue to fall under the Audit Commission regime until then.
Welsh Ministers have agreed that we retain the power in Clause 2 as a backstop power to add cross-border bodies back into Schedule 2 by regulations at a later date, should the transfer of functions take longer than expected. Regulations made under this power will be subject to consultation and the affirmative procedure. They would also require consent from the National Assembly for Wales. With this explanation, I hope noble Lords will accept this amendment. I beg to move.
My Lords, I thank the Minister for his explanation of this amendment. I accept that it is consequent upon decisions of the Welsh Government and their intention to transfer the functions of the two cross-border bodies to Natural Resources Wales and to bring them under the Welsh audit system. I understand also that it is the intention that the new governance arrangements will be in place by the time the Audit Commission closes, but that a backstop has been retained should that not actually have occurred. We are content with this amendment and happy to support it.
Motion on Amendment 43 agreed.
Motion on Amendments 44 to 73
44: Schedule 3, page 38, line 21, at end insert—
“(4) A local auditor appointed to audit the accounts of a parish meeting must be appointed by the parish meeting itself (and not by its chairman on behalf of the parish meeting).”
45: Schedule 4, page 40, line 4, at end insert—
“(6) The function of appointing a panel or making a determination under this paragraph is to be exercised in the case of a parish meeting by the parish meeting itself (and not by its chairman on behalf of the parish meeting).”
46: Schedule 4, page 42, line 2, after “authority” insert “other than a health service body”
47: Schedule 5, page 43, line 3, at end insert—
“(3) The reference in sub-paragraph (1) to Part 42 of the Companies Act 2006 includes sections 1288, 1289, 1290 and 1292 of that Act (regulations and orders) as they apply in relation to that Part.”
48: Schedule 5, page 44, line 27, at end insert—
“6A In section 1216 (effect of appointment of a partnership), after subsection (5) insert—
“(5A) The consent or agreement of a parish meeting under subsection (5) must be given by the parish meeting itself (and not by its chairman on behalf of the parish meeting).”
49: Schedule 5, page 44, line 31, leave out second “or” and insert “and”
50: Schedule 5, page 44, line 40, leave out “in accordance with regulations under” and insert “by virtue of”
51: Schedule 5, page 46, leave out lines 9 to 19 and insert—
“(7) A person holds an appropriate qualification for the purposes of this Chapter if, immediately before the relevant time, the person was qualified for appointment as an auditor under section 3 of the Audit Commission Act 1998 by virtue of the person’s membership of a body listed in subsection (7) of that section.
(7A) A person holds an appropriate qualification for the purposes of this Chapter if—
(a) before the relevant time, the person began a course of study or practical training leading to a professional qualification in accountancy offered by a body listed in section 3(7) of the Audit Commission Act 1998,
(b) the person would have been qualified for appointment as an auditor under section 3 of that Act by virtue of subsection (5)(b) of that section if that qualification had been obtained before that time, and
(c) the person obtained that qualification within the period of 6 years beginning with that time.”
52: Schedule 5, page 46, line 20, leave out “subsection (7)” and insert “subsections (7) and (7A)”
53: Schedule 5, page 49, line 1, at end insert—
“(7) A person appointed under this section to conduct a second audit of the accounts of a parish meeting, or to review and report on the first audit of such accounts, must be appointed by the parish meeting itself (and not by its chairman on behalf of the parish meeting).””
54: Schedule 5, page 51, line 36, leave out “7(1)” and insert “4(1)(b)”
55: Schedule 5, page 51, line 40, at end insert— ““parish meeting section 41(1) of the Local Audit and Accountability Act 2014”;”
section 41(1) of the Local Audit and Accountability Act 2014”;”
56: Schedule 5, page 52, line 25, leave out sub-paragraph (3) and insert—
“(3) For paragraph 6 (holding of appropriate qualification) substitute—
“Holding of appropriate qualification
6 (1) The body must have rules to the effect that an individual is not eligible for appointment as a local auditor unless the individual—
(a) holds an appropriate qualification,
(b) is an EEA auditor who has passed an aptitude test in accordance with sub-paragraph (3), unless an aptitude test is not required (see sub-paragraphs (4) and (5)), or
(c) has been authorised to act as a local auditor by the body pursuant to the European Communities (Recognition of Professional Qualifications) Regulations 2007 (SI 2007/2781), and complies with the requirements of those Regulations that apply to a person acting as a local auditor.
(2) The body must have rules to the effect that a firm is not eligible for appointment as a local auditor unless—
(a) each individual responsible for local audit work on behalf of the firm is eligible for appointment as a local auditor, and
(b) the firm is controlled by qualified persons (see paragraph 7 below).
(3) The aptitude test—
(a) must test the individual’s knowledge of subjects—
(i) that are covered by a recognised professional qualification,
(ii) that are not covered by the professional qualification already held by that individual, and
(iii) the knowledge of which is essential for the pursuit of the profession of local auditor;
(b) may test the individual’s knowledge of rules of professional conduct;
(c) must not test the individual’s knowledge of any other matters.
(4) No aptitude test is required if—
(a) the individual is to provide services consisting of local audit work on a temporary and occasional basis, or
(b) the subjects that are covered by a recognised professional qualification and the knowledge of which is essential for the pursuit of the profession of local auditor are covered by the professional qualification already held by the individual.
(5) Whether the provision of services is on a temporary and occasional basis is to be assessed on a case by case basis and in particular by reference to its duration, its frequency, its regularity and its continuity.
(6) A firm which has ceased to comply with the conditions mentioned in sub-paragraph (2) may be permitted to remain eligible for appointment as a local auditor for a period of not more than three months.”
(3A) In paragraph 7 (meaning of control by qualified persons)—
(a) in sub-paragraph (1) (introductory), for “paragraph 6(1)(b)” substitute “paragraph 6(2)(b)”, and
(b) in sub-paragraph (2)(b)(i), (requirement for firm to be eligible for appointment as statutory auditor), for “statutory auditor” substitute “local auditor, or as a statutory auditor in accordance with this Part of this Act as it has effect apart from its application by virtue of Schedule 5 to the Local Audit and Accountability Act 2014.”.”
57: Schedule 5, page 55, line 38, at end insert “—(a)”
58: Schedule 5, page 55, line 40, at end insert “, and
(b) in paragraph 10(6) (requirement for auditor of body established by order to be eligible for appointment as statutory auditor), for “a statutory auditor” substitute “a local auditor, or a statutory auditor in accordance with this Part of this Act as it has effect apart from its application by virtue of Schedule 5 to the Local Audit and Accountability Act 2014.”.”
59: Schedule 7, page 60, line 38, after “is” insert “—
(i) a functional body,
(ii) an entity connected with a functional body, or
60: Schedule 7, page 61, line 14, leave out sub-paragraph (2)
61: Schedule 7, page 61, line 22, after “is” insert “—
(i) a functional body,
(ii) an entity connected with a functional body, or
62: Schedule 7, page 62, line 4, at end insert—
“(3A) Sub-paragraph (3)(a) does not apply in relation to a parish meeting.”
63: Schedule 7, page 62, line 35, leave out sub-paragraph (8)
64: Schedule 7, page 63, line 2, leave out from “entity” to end of line 4 and insert “, subject to sub-paragraph (2A).”
65: Schedule 7, page 63, line 4, at end insert—
“(2A) This paragraph applies to the Mayor’s Office for Policing and Crime where a local auditor has made a report or recommendation relating to the Commissioner of Police of the Metropolis regardless of whether the Office is a connected entity or was such an entity at the time to which the report or recommendation relates.”
66: Schedule 7, page 63, line 10, leave out from ‘authority’ to end of line 11
67: Schedule 7, page 64, line 10, leave out sub-paragraph (2) and insert—
“(2) This paragraph does not apply where a local auditor has made a report or recommendation relating to the Commissioner of Police of the the Authority or was so connected at the time to which the report or recommendation relates.”
68: Schedule 7, page 65, line 3, at end insert—
“(2A) The functions of a parish meeting under paragraph 5 are to be exercised by the parish meeting itself (and not by its chairman on behalf of the parish meeting).”
69: Schedule 7, page 65, line 29, at end insert—
“(5A) Sub-paragraph (5) does not apply in relation to a parish meeting.”
70: Schedule 8, page 68, line 31, at end insert—
“(8) In this Schedule “the relevant authority concerned”, in relation to an advisory notice, means the relevant authority to which, or to any officer of which, the notice is addressed.”
71: Schedule 8, page 69, line 1, at end insert—
“(2A) The condition in paragraph (a) of sub-paragraph (2) is met in relation to a parish meeting only if the matters referred to in that paragraph are considered by the parish meeting itself (and not by its chairman on behalf of the parish meeting).”
72: Schedule 8, page 69, line 7, leave out sub-paragraph (4) and insert—
“(4) A local auditor may recover from a relevant authority—
(a) the reasonable costs of determining whether to issue an advisory notice to that authority or an officer of that authority, and
(b) the reasonable costs of issuing an advisory notice to that authority or an officer of that authority.
(4A) Sub-paragraph (4)(a) applies regardless of whether the notice is in fact issued.”
73: Schedule 8, page 69, line 10, leave out sub-paragraph (5)
Motion on Amendments 44 to 73 agreed.
Motion on Amendments 74 to 76
74: Schedule 9, page 72, line 17, at end insert—
“(10A) In this paragraph “enactment” includes—
(a) an enactment contained in, or in an instrument made under, a
Measure or Act of the National Assembly for Wales,
(b) an enactment contained in, or in an instrument made under, an
Act of the Scottish Parliament, and
(c) an enactment contained in, or in an instrument made under, Northern Ireland legislation.”
75: Schedule 9, page 72, line 28, leave out paragraph (f) and insert—
“(f) a health and social care body mentioned in paragraphs (a) to (e) of section 1(5) of the Health and Social Care (Reform) Act (Northern Ireland) 2009.”
76: Schedule 9, page 73, line 44, after ‘offenders,’ insert—
“(ba) to assist in the prevention and detection of errors and inaccuracies,”
My Lords, these amendments extend the potential purposes for which a data-matching exercise can be carried out by the National Fraud Initiative and make minor clarifications and updates to the data-matching provisions in Schedule 9. Following the helpful amendments of the noble Lord, Lord McKenzie, when the Bill was last in this House concerning data-matching exercises, the Government introduced Amendment 76. This amendment would add the prevention and detection of errors and inaccuracies as further potential purposes for which a data-matching exercise can be carried out by the National Fraud Initiative.
The amendment would allow the National Fraud Initiative to undertake the ad hoc data-matching exercises that it does at present through the Audit Commission’s wider powers once it moves over to the Cabinet Office. If your Lordships’ House agrees, the amendment would allow the possible extension of the National Fraud Initiative’s potential data-matching powers to include: the prevention and detection of crime other than fraud; assisting in the apprehension and prosecution of offenders; assisting in the recovery of debt owing to public bodies; and the prevention and detection of inaccuracy and error, which is the subject of this amendment.
The noble Lord, Lord McKenzie, proposed an alternative amendment relating to the prevention and detection of maladministration and error when the Bill was previously here in Committee, which we undertook to consider. However, although we felt that a good case had been made for the inclusion of “error”, we concluded that there was insufficient evidence as to how the investigation of maladministration over and above error might be used. Furthermore, “maladministration” has a strong association with the work of the Local Government Ombudsman. We were concerned that its use here might raise the potential for conflicting roles and responsibilities. We therefore considered that the term “error and inaccuracies” was both more appropriate and indeed wider than the amendment proposed originally. We hope that the noble Lord, Lord McKenzie, concurs with that, and I thank him for bringing forward the original proposal that has led to this amendment.
Before enacting any of these purposes, the Secretary of State must consult relevant authorities, their representatives and the bodies affected. In addition, those regulations would be subject to the affirmative resolution procedure. In our view, these safeguards will ensure that proper consideration is given to any extension to the initiative’s current powers.
Commons Amendments 74 and 75 are minor and technical amendments made purely to ensure consistency with other, similar provisions in the Bill or with other legislation. With these assurances, I hope your Lordships will feel able to approve these amendments.
My Lords, I thank the Minister for her explanation of these amendments and her kind remarks. As has been noted, we had an extensive debate around data matching when the Bill was originally before us, prompted in particular by concerns that data matching undertaken by the Audit Commission under its audit powers would be lost with the demise of the Audit Commission. These powers were not covered by data-matching powers exercisable for the prevention and detection of fraud. Nor were they included in the list of items which, after due process, could be added to those powers. We pressed the case to add data matching for the purpose of detection of maladministration and error to the list of those powers which could be introduced. As the Minister has explained, we highlighted information provided by the Audit Commission as to how its powers had been used to identify problems with GP lists, for example, which would be lost without an amendment to the data-matching provisions. The Minister handling the amendment, the noble Lord, Lord Wallace of Saltaire, who coincidentally had Lords responsibility for Cabinet Office matters, rightly stressed the need for sensitivity around data matching but said that the Government would reflect. The point we pressed was that we were not seeking an extension of data-matching powers, leading to preservation of those that would be lost with the Audit Commission. We are delighted to note that the Government have responded positively on these matters and proposed the addition of,
“prevention and detection of errors and inaccuracies”.
We are told that this formulation will allow the National Fraud Initiative to undertake the ad hoc data-matching exercises it does at present through the Audit Commission under its powers once the NFI moves to the Cabinet Office.
The Minister will be aware of the amendment that we and colleagues in the Commons pressed about the prevention and detection of maladministration and error. As we have heard, there was some debate around excluding maladministration from the amendment, but the main thrust of the Government’s position was the overlap with the ombudsman’s responsibilities to look at this. I do not propose to rerun the arguments advanced by Andy Sawford about the omission of maladministration being a lost opportunity. However, we understand that the Audit Commission has confirmed that the Government’s amendment would enable the NFI to carry on the data matching it conducts through other powers—I think the Minister has actually confirmed that. This was our key starting point, so although we are a tad disappointed at the omission of maladministration, we are grateful that the Government have responded to our arguments and will not press the matter further today. Can the Minister say when it is planned to take the steps, including the necessary consultation, to add these purposes to the NFI’s powers to data match? We accept that Amendments 74 and 75 maintain the status quo in relation to the cross-boundary work of the NFI and we have no points to raise on that. We are happy, indeed pleased, to support these amendments.
My Lords, I am grateful to the noble Lord, Lord McKenzie, for his very gracious welcome to this amendment, which, as I said before, stems from an amendment that he originally proposed. I will just confirm to the noble Lord, and indeed your Lordships’ House, that we are in discussions with the Cabinet Office regarding the future operation of the National Fraud Initiative and the commencement of the relevant parts of the Bill that are required to ensure the safe continuation of the commission’s data-matching exercises. This is something that is very important and I can confirm that this will continue when the National Fraud Initiative moves to sit with the Cabinet Office. The enactment of the further purpose which we have been discussing tonight is not required to support the transition of the National Fraud Initiative but, as we have identified through the course of the Bill, it is a useful addition to the potential powers for which exercises can be undertaken. It will allow the national fraud initiative to undertake the ad hoc data-matching exercises that it does at present under the Audit Commission’s wider powers once it moves over to the Cabinet Office in 2015. The addition of this potential extension also fits well with the Cabinet Office’s overarching remit, covering fraud, error and debt.
As to the noble Lord’s question about timescales, at present, we do not have a draft timeline for the introduction of such powers should the Cabinet Office determine that it intends to bring them forward. However, I hope that I have been able, through the introduction of this amendment, to give the noble Lord the reassurance that the extension of these powers will be possible at such time that the Government decide to bring forward these regulations.
Motion on Amendments 74 to 76 agreed.
Motion on Amendments 77 to 101
77: Schedule 10, page 75, line 4, leave out “paragraphs (a) and (b)” and insert “paragraph (a)”
78: Schedule 10, page 75, line 10, leave out paragraph 5
79: Schedule 10, page 75, line 29, leave out paragraph 7
80: Schedule 10, page 75, line 34, leave out paragraph 10 and insert—
“10 In section 25(2) (coordination of inspections: persons to whom the section applies), for paragraph (a) substitute—
“(a) an inspector or assistant inspector appointed under section 10(1) or (2);”.”
81: Schedule 10, page 75, line 36, leave out “and (3A)”
82: Schedule 10, page 75, line 36, leave out “and Auditor General for Wales”
83: Schedule 10, page 75, line 38, leave out “Auditor General for Wales” and insert “Wales Audit Office”
84: Schedule 10, page 75, line 39, leave out from “(3)(a)” to end of line 40
85: Schedule 12, page 81, line 9, at end insert—
“Transport Act 1985 (c. 67)
12A (1) Section 76 of the Transport Act 1985 (audit of accounts of public transport companies) is amended as follows.
(2) For subsection (1) substitute—
“(1A) In a case where a public transport company’s controlling authority are—
(a) a county council or county borough council in Wales, or
(b) a composite authority of which both or all the constituent councils are county councils or county borough councils in Wales,
it shall be the duty of the controlling authority to exercise their control over that company so as to ensure that the company appoints as auditors of the company only persons who, in addition to meeting the requirements of Part 42 of the Companies Act 2006 (statutory auditors), are approved for appointment as such auditors by the Auditor General for Wales.
(1B) In any other case, it shall be the duty of a public transport company’s controlling authority to exercise their control over that company so as to ensure that the company appoints as requirements of Part 42 of the Companies Act 2006 (statutory auditors).”
(3) In subsection (2), after “(1)” insert “or (as the case may be) (1A)”.”
86: Schedule 12, page 82, line 24, leave out from first “the” to end of line 25 and insert “definitions of “the first financial year” and “financial year” and insert—
““financial year” means—
(a) the period commencing with the date on which the corporation is established and ending with the second 31st March following that date, and
(b) each successive period of twelve months.””
87: Schedule 12, page 83, line 19, at end insert—
“Social Security Administration (Northern Ireland) Act 1992 (c. 8)
In section 117(8) of the Social Security Administration (Northern Ireland) Act 1992 (unauthorised disclosure of information relating to particular persons: Audit Commission)—
(a) omit paragraph (gb), and
(b) after paragraph (gc) insert—
“(gd) a local auditor within the meaning of the Local
Audit and Accountability Act 2014;
(ge) the Auditor General for Wales and any member of the Auditor General’s staff;
(gf) any member of the staff of the Wales Audit Office, and any person providing services to that Office;”.”
88: Schedule 12, page 84, line 19, at end insert—
“Local Government Act 1999 (c. 27)
33A (1) Section 23 of the Local Government Act 1999 (accounts of best value authorities) is amended as follows.
(2) In subsection (4) omit paragraph (a).
(3) In subsection (7) for “an auditor appointed by the Audit Commission” substitute “a local auditor appointed in accordance with the Local Audit and Accountability Act 2014 or provision made under it”.”
89: Schedule 12, page 86, line 16, leave out paragraph 44 and insert—
“ (1) Section 26D of the Public Finance and Accountability (Scotland) Act 2000 (disclosure of results of data matching etc) is amended as follows.
(2) In subsection (4) for paragraph (b) substitute—
“(b) the Secretary of State,
(ba) the Minister for the Cabinet Office,
(bb) a local auditor within the meaning of the Local Audit and Accountability Act 2014,”.
(3) In subsection (7) in the definition of “relevant NHS body” for paragraph (b) substitute—
“(b) a body mentioned in paragraph (a), (b) or (c) of paragraph 4(11) of Schedule 9 to the Local Audit and Accountability Act 2014 (“relevant NHS body”);”.”
90: Schedule 12, page 88, line 16, at end insert—
“50A(1) Section 100 (exercise of powers by reference to authorities’ performance categories) is amended as follows.
(2) Omit subsections (1) and (2).
(3) In subsection (3), for “those powers” substitute “certain powers”. (4) Omit subsections (4) to (8).”
91: Schedule 12, page 88, line 24, leave out paragraph 54 and insert—
“ (1) Article 4D of the Audit and Accountability (Northern Ireland) Order 2003 (disclosure of results of data matching etc) is amended as follows.
(2) In paragraph (2)(b) after “body”, in each place, insert “or person”.
(3) In paragraph (3) after “bodies” insert “and persons”.
(4) In that paragraph, for sub-paragraph (a) substitute—
“(a) the Secretary of State,
(aa) the Minister for the Cabinet Office,
(ab) a local auditor within the meaning of the Local Audit and Accountability Act 2014,”.
(5) In paragraph (4) after “body”, where it first occurs, insert “or person”. (6) In paragraph (6)(b) for paragraph (ii) substitute—
“(ii) a body mentioned in paragraph (a), (b) or (c) of paragraph 4(11) of Schedule 9 to the Local Audit and Accountability Act 2014 (“relevant NHS body”);”.”
92: Schedule 12, page 88, line 33, leave out paragraph 58 and insert—
“58 (1) Section 62 (co-operation) is amended as follows. (2) Omit paragraph (b).
(3) In the heading (in its original form and as substituted by paragraph 61(3) of Schedule 4 to the Public Audit (Wales) Act 2013) omit “, Audit Commission”.”
93: Schedule 12, page 88, line 34, leave out paragraph 59 and insert—
“ (1) Section 64D (disclosure of results of data matching etc) is amended as follows.
(2) In subsection (2)(b) after “body”, in each place, insert “or person”.
(3) In subsection (3) after “bodies” insert “and persons”.
(4) In that subsection, for paragraph (a) substitute—
“(a) the Secretary of State,
(aa) the Minister for the Cabinet Office,
(ab) a local auditor within the meaning of the Local Audit and Accountability Act 2014,”.
(5) In subsection (4) after “body”, where it first occurs, insert “or person”.
(6) In subsection (6)(b) for sub-paragraph (ii) substitute—
“(ii) a body mentioned in paragraph (a), (b) or (c) of paragraph 4(11) of Schedule 9 to the Local Audit and Accountability Act 2014 (“relevant NHS body”);”.”
94: Schedule 12, page 89, line 3, leave out paragraph (a) and insert—
“(a) at the end of paragraph (a) insert “and”,”
95: Schedule 12, page 89, line 3, at end insert—
“(aa) in paragraph (b) omit “in the case of an order containing a scheme within paragraph 1(1)(a),”, and”
96: Schedule 12, page 89, line 8, leave out “to the Auditor General for Wales by” and insert “in accordance with”
97: Schedule 12, page 99, line 23, at end insert—
“(za) section 95(4) of the Traffic Management Act 2004;”
98: Schedule 12, page 99, line 25, after first “(b)” insert “paragraph 14 of Schedule 1 and”
99: Schedule 12, page 99, line 26, at end insert—
“(ba) section 31(2) of the Legislative and Regulatory Reform Act 2006;”
100: Schedule 12, page 99, line 27, after “of” insert “and paragraph 5(6) of Schedule 14 to”
101: Schedule 12, page 99, line 29, leave out “52 and 55” and insert “9 and 52”
My Lords, Commons Amendments 77 to 101 make a number of minor and technical related and consequential amendments to Schedules 10 and 12 to the Bill.
Commons Amendments 77 to 79 and 81 to 84, to Schedule 10, simply remove redundant references or make clarifications to related provisions in existing legislation. They are the result of amendments to the Local Government Act 1999 made by the Public Audit (Wales) Act 2013, which removed or amended provisions relating to the Auditor-General for Wales.
Commons Amendment 80 will amend Section 25(2)(a) of the Local Government Act 1999. The amendment ensures that inspectors and assistant inspectors of best value authorities will continue, as they do now, to have regard to any guidance issued by the Secretary of State when carrying out investigations or inspections of best value authorities once the Audit Commission is abolished.
Commons Amendments 85 to 101, to Schedule 12, will remove redundant references to the Audit Commission in a range of other Acts and, where necessary, replace them with reference to auditors appointed in accordance with this Bill, and amend provisions already in the Bill to avoid unintended outcomes once the Audit Commission has been abolished. I hope that I have been able to give noble Lords the assurances they need that these are technical, minor and consequential amendments.
In case this is the final time I am on my feet speaking about this Bill, I thank all noble Lords who have participated in this evening’s debate and I am grateful for the support I have received from noble Lords for these various amendments. I would also like to take this opportunity to thank the Bill team for their consistent hard work on this piece of legislation. It has been my privilege to work with them only for this very final stage of the Bill, but I know that they have had a long and hard-working journey through both Houses. My predecessor would, I am sure, want me to relay her thanks to the Bill team. I beg to move.
My Lords, we accept that these are minor and technical amendments and have no points to raise.
This is my final utterance on this Bill so I, too, would like to take the opportunity to thank all those who have been involved, particularly the Bill team, who have been helpful during the passage of the Bill and in focusing on these amendments. I thank the stalwarts of our debates, the noble Lords, Lord Tope and Lord Shipley, the noble Earl, Lord Lytton, and my noble friend Lord Beecham, who brings with him not only a very serious understanding of local government and its challenges but the fantastic ability to deliver his thoughts in a light-hearted and challenging way. I also thank the noble Baroness, Lady Stowell, the noble Earl, Lord Attlee, and the noble Baroness’s predecessor, the noble Baroness, Lady Hanham.
My Lords, I follow the noble Lord in thanking the noble Baroness for her unfailing courtesy, and that of her Bill team, and particularly for keeping me in the loop as matters have proceeded through the other place. That was very welcome and I am extremely grateful for that, and I am sure I can say the same for the parish and town council movement for her consideration and care over this matter.
My Lords, lest my silence should be misunderstood, I echo those sentiments from the Liberal Democrat Benches. I began this evening by paying tribute to the noble Baroness, Lady Hanham, and wishing well to our Minister now, the noble Baroness, Lady Stowell, who has performed eloquently this evening and succeeded in passing more than 100 amendments, which is getting close to a record. I echo the thanks that have been given to the Bill team for the great help they have given all of us in understanding this most interesting Bill.
Motion on Amendments 77 to 101 agreed.
Motion on Amendments 102 and 103
102: In the Title, line 10, after “publicity;” insert “to make provision about access to meetings and documents of local government bodies;”
103: In the Title, line 10, after “referendums;” insert “to make provision about polls consequent on parish meetings;”
Motion on Amendments 102 and 103 agreed.