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Combined Authorities (Overview and Scrutiny Committees, Access to Information and Audit Committees) Order 2016

Volume 778: debated on Thursday 26 January 2017

Motion to Approve

Moved by

My Lords, if approved and made, the draft order we are considering today will provide the basis for a robust and consistent approach to accountability in combined authorities across the country. The order will be another key step in implementing the agreed devolution deals and is essential for ensuring effective accountability for the new budgets and powers devolved to directly elected mayors and combined authorities. I remind noble Lords that Parliament has approved, and we have already made, orders establishing city region mayors in Greater Manchester, the Liverpool city region, the Sheffield city region, the West Midlands and the Tees Valley. Furthermore, orders creating such mayors in the west of England, for Cambridgeshire and Peterborough have been laid before Parliament to be considered and, if approved, will be in time for elections in May.

These devolution deals confer greater powers and budgets on the combined authorities. The order puts in place a robust framework to ensure that once powers and budgets are devolved and mayors elected, the actions of combined authorities and mayors are openly and effectively scrutinised and those responsible held properly to account. The approach we are taking in this order, therefore, is to mirror the current scrutiny arrangements in local government and to strengthen them where necessary. Such strengthening, for example, includes requiring at least two-thirds of members to be present before the business of an overview and scrutiny committee can be transacted. It also includes a requirement for any independent chair of an overview and scrutiny committee—that is a person who is not a member of or otherwise associated with any of the constituent councils or the combined authority—to go through an open and transparent recruitment process.

The order will be supplemented by practical guidance provided by the Centre for Public Scrutiny—chaired by the noble Lord, Lord Kerslake, who was here a moment ago—on how these arrangements will operate on the ground. Officials are working closely with the Centre for Public Scrutiny, and we are very grateful for the centre’s support and commitment to provide this practical guidance. It is through such practical guidance that a strong culture of scrutiny can be built to ensure that transparency and scrutiny are embedded in the day-to-day operation of combined authorities and their mayors.

Along with such guidance, it will be important that combined authorities ensure that scrutiny is adequately resourced and that there is sufficient capacity and expertise for the scrutiny function to be effective and credible. This is essential if combined authorities are to fulfil their duty to ensure value for money.

The order provides for a core legal framework for scrutiny arrangements in combined authorities, which the Government have developed in consultation with local areas and relevant stakeholders, including the National Audit Office, the Centre for Public Scrutiny, existing combined authorities and those involved in establishing new combined authorities. This order is the first piece of secondary legislation to be made under paragraphs 3 and 4(3) of Schedule 5A to the 2009 Act. It makes provision for the composition and proceedings of overview and scrutiny and audit committees, similar to the provisions in the Local Authorities (Committee System) (England) Regulations 2012 and the Local Authorities (Executive Arrangements) (Meetings and Access to Information) (England) Regulations 2012. The order, if made, will commence after the new combined authority mayors take office in May 2017.

The order introduces several requirements regarding membership of the overview and scrutiny committee to ensure representativeness and accountability. The majority of members must be councillors of the constituent councils on the combined authority. The political balance of the membership must, as far as practicable, align with that of the constituent councils. To ensure the independence of the committee chair, where there is an independent mayor, the chair cannot be from the majority party on the combined authority. The order further sets out that at least two-thirds of members must be present before business may be transacted. To ensure clear outcomes, the order also provides that no member of an overview and scrutiny committee has a casting vote and that if a vote is tied it is deemed not to have been carried.

The order also includes important provisions to protect the committees’ integrity and independence. As in local authorities, certain procedures must be adhered to when appointing an independent person, and committees must publish notices of appointments to ensure transparency locally. To ensure the overview and scrutiny committee’s independence, the committee cannot include any officer from the combined authority or its constituent councils.

The order also provides for the proceedings of overview and scrutiny committees. They are able to call in a decision made, but not implemented, by the combined authority or the mayor and require that this decision remain unimplemented for up to 14 days. Within 10 days after the mayor or combined authority receives a recommendation from the committee, a meeting must be held to consider that recommendation and related decision. The combined authority must respond to reports and recommendations from the committee within two months. To ensure the necessary support for the overview and scrutiny committees, the combined authority must designate one of its officers as the scrutiny officer.

For audit committees, the order makes provisions regarding membership, again designed to ensure independence and representativeness. These are that: at least one independent person must be appointed; membership should reflect the political balance of the constituent councils; at least two-thirds of members must be present before the business of the audit committee can be transacted; and officers from the combined authority and its constituent councils cannot be members.

The order provides a clear legal framework to be enhanced by practical guidance. What is crucial is not just that there is a robust framework with strong practical guidance in place but that this framework is accompanied by each combined authority creating a culture of transparency and accountability. This will ensure that the public can be confident that combined authorities and their mayors are being strongly held to account for delivering their manifesto commitments.

The draft order we are considering today is vital for ensuring consistent, robust and transparent accountability in combined authorities in time for the first combined authority mayors to take office in May 2017. I commend the order to the House.

My Lords, this a slightly lengthier discussion than we had on the previous two orders. It results from there having been great cross-party collaboration when the Cities and Local Government Devolution Bill passed through your Lordships’ House. That work developed the basis for the proposals now before us. Let me say at the outset that much of it is welcome.

For the avoidance of any doubt, I want first to ask the Minister to confirm that the order will apply to all combined authorities automatically and that, if there is to be a combined authority in future which does not have a mayor, the order will apply to it as well. I then have a few specific questions. When the Cities and Local Government Devolution Bill passed, we had established separate overview and scrutiny committees and audit committees—it was right to separate those two functions. But in the case of audit, I hope that the Minister can confirm that it will encompass risk, particularly investment decisions.

One function of overview and scrutiny will be to scrutinise risk, but there are advantages in audit committees having a clear risk function as well, because some investment decisions will be very big financial decisions. It was good to see from the list of consultees that the National Audit Office and the Centre for Public Scrutiny were consulted, because one of the aims that we had with the Bill was to ensure that value-for-money audits were done, as well as simply financial audits. Can the Minister confirm whether the proposals given to the Government by the National Audit Office and the Centre for Public Scrutiny have been incorporated in this order?

I have a further concern that there is to be no governance framework for the operation of overview and scrutiny committees. My questions are: how does an overview and scrutiny committee know what it needs to scrutinise? Who will tell it what it should review? Am I right in assuming that agendas and papers for the meetings of combined authorities will be made available, and that they will include both the public and private parts of those agendas? We need to be clear exactly what is proposed here. When the Bill was passed, there was a lot of concern about access to meetings. We do not want to see decisions being taken in lengthy pre-meetings of combined authorities, from which the press and public are excluded, with the formal meeting of a combined authority being very limited in time and content. I submit to the Minister that such an outcome would not be good for local democracy or for the success of mayoral combined authorities in the public perception.

The absence of a governance framework places a lot of responsibility on the shoulders of the committee members, in particular independent members, to ensure transparency and openness. I suggest to the Government that they should monitor the appointment of independent members. There is clearly a process, which we welcome, but I think the Government will need to monitor that appointment process to ensure that it is indeed wholly transparent.

I have a further query about timescales, which relates to the two months allowed for a combined authority to respond to an overview and scrutiny committee. The timescales, as I understand them, are these: an overview and scrutiny committee will call in a decision if it wishes to, which will prevent implementation for up to 14 days. When that committee has held its meeting, the combined authority or mayor must hold a meeting to consider what it has said within 10 days. Potentially, that gives 24 days for the total time taken to that point. However, a period of two months is then allowed for the combined authority to respond to the overview and scrutiny committee, to explain why it made its decision. That is too long. I have not understood why it should take two months. I would be puzzled if it needed to take more than a fortnight, but there may be a reason that I have not understood. I am happy to seek the Minister’s reassurance on this point.

Finally, I would like an explanation, if the Minister is able to give one, for the statement about protecting the overview and scrutiny committee’s independence in the Explanatory Notes. The relevant bullet point, at the top of page 4, says that,

“to protect the overview and scrutiny committee’s independence, the committee may not include any officer from the combined authority or the combined authority’s constituent councils”.

That sounds eminently right and reasonable. What I am not clear about is exactly how the overview and scrutiny committees will then be staffed. There will clearly have to be staff members present, writing opinions and papers for the attention of scrutiny committee members, which implies quite significant staffing. That may be fine, but presumably it also implies that the officers giving advice to the overview and scrutiny committee will potentially be required to give evidence to the overview and scrutiny committee. What power does an overview and scrutiny committee—which may not include any officer from the combined authority or the combined authority’s constituent councils, so there must be independent officers present—have to require an officer who has given advice to a combined authority to attend a meeting? I should be grateful if the Minister will explain that point.

My Lords, again for completeness, I refer the House to my interests set out in the register in so far as they are relevant to the issues being debated. I should state at the outset that I am content with the order before your Lordships’ House and am happy to approve it.

Generally, the order brings combined authorities under arrangements similar to those that exist elsewhere in local government. The new combined authorities, which will elect their mayors this May, will have considerable powers over large areas of service delivery and policy that have a tremendous effect over people’s lives. The powers that it is proposed to give to these new elected mayors and combined authorities are, in some cases, not yet through their parliamentary procedures, such as bus franchising, which is being debated in the other place as it considers the Bus Services Bill. The noble Lord, Lord Shipley, raises some important points about how the procedures will operate in the future and I will be interested to hear the Minister’s response.

I am pleased about the measures in respect of overview and scrutiny, which can serve a valuable function. I have first-hand experience of this, so I hope that the House will allow me to explain with a local example how valuable the function is. I have told the House many times before that I am a councillor in the London Borough of Lewisham. I may not have mentioned that I am a supporter of and season ticket holder at Millwall Football Club. I and many other councillors, residents and campaigners—including Vicky Foxcroft, the Member for Lewisham Deptford, Neil Coyle, the Member for Bermondsey and Old Southwark, and the Association of Millwall Supporters—were concerned at the proposals for redevelopment around the Den, which would not deliver any social housing or enough affordable housing. The club was clear that that potentially put its future at risk in a part of south-east London where it has been part of the community since 1910. Councillor Alan Hall, Councillor Brenda Dacres and others on the overview and scrutiny committee were able to provide robust challenge to the proposals. Other cabinet members, including Councillor Joe Dromey, also opposed the plans, which in recent weeks had a considerable amount of publicity in the Guardian, the Evening Standard, the South London Press, Private Eye, Sky Sports and the BBC. I have been struck by how many members of the House’s staff have said to me as walked past, “Defend my Den, my Lord”.

Yesterday it was announced that the planned compulsory purchase of land leased to Millwall would not be going ahead and that the local authority wants to get around the table to seek agreement on the way forward in a manner that brings together the club, the Millwall Community Trust, which does a great job with children in the area, and others to secure the redevelopment by agreement. Overview and scrutiny played an invaluable role in achieving that turnaround, as did the Association of Millwall Supporters, by highlighting concerns and issues. That is a local example of effective overview and scrutiny. I am happy to support the order.

My Lords, the Hansard report of what the noble Lord just said should be sent to the members of every overview and scrutiny committee throughout the country in order to get an insight into how these committees can effectively further local democracy.

I will deal with some of the questions that were raised by the noble Lord, Lord Shipley. First, yes, the template that we are setting out today will apply not just to the authorities already up and running but to all combined authorities, whether or not they have a mayor—so existing and future.

The noble Lord then asked about risk. The 2016 Act sets out the requirement to establish an audit committee and gives these committees the power to review and scrutinise the authority’s financial affairs, including the,

“risk management, internal control and corporate governance arrangements”.

He asked whether we would monitor the appointment of the independent members to make sure that they were genuinely independent. Yes, we will. As for times, these are maximum times, and I may be able to say a little more about that in a moment.

The noble Lord also mentioned the absence of a governance framework. The order provides the broad legislative framework, while the guidance, which the Centre for Public Scrutiny is preparing, will help each combined authority to develop its detailed framework and operational arrangements for scrutiny. Officials worked with both the NAO and the centre in the development of this legislation, and their proposals have largely been included. We will work closely with the CfPS on the guidance, which it is going to publish shortly.

On access to information and the ability to summon, the overview and scrutiny committee has access to information powers, including the power to require the mayor, officers and members of the combined authority to come before the committee and answer questions and give evidence. The combined authority will establish an O&S committee and the order requires that the majority of the members of that committee must be constituent councillors. It is for the combined authority to determine the size of the committee, taking into account the political balance requirement. It will be serviced by officers of the combined authority, who will indeed need to have the necessary resources to make sure that it can discharge its duties.

As to whether decisions will open to the public, the minutes of the committees are public, except that personal and confidential information, as defined in the order, will remain unavailable to the public.

We have dealt with the issue of holding the mayoral elections on the same day as a general election. There may be some other questions that the noble Lord asked which I have not answered, in which case I will write to him. He can get up and ask me again, but the chances are that I will still say, “I will write to the noble Lord”.

May I just clarify the Minister’s very helpful comment on officers of the combined authority attending overview and scrutiny meetings? The officers of a combined authority will administer the work of the overview and scrutiny committee. The Minister may prefer to write on this, but can they be the same officers as those who are administering the combined authority? In other words, there is a question about the independence of advice that is given to the overview and scrutiny committee. Who decides, for example, what gets on to an agenda of a meeting and how do the members of the overview and scrutiny committee know what they should be discussing? Presumably, the officers of the combined authority who are managing the work of the overview and scrutiny committee will tell them what that is, but I hope that when guidance is issued, it will be made absolutely clear that an overview and scrutiny committee must be given the maximum information possible to enable it to do its job properly.

I think I need to write to the noble Lord. I understand the point he is making, which is that there could be a conflict of interest on the part of the employees of the combined authority who may be servicing the O&S committee but may also be employees of the authority doing something else, so one needs some form of Chinese wall to make sure that the O&S committee gets the information it needs, even if that may embarrass some of its fellow employees on the combined authority.

The combined authority must appoint a scrutiny officer whose role is that of scrutiny, which is helpful. As I say, perhaps I may write to the noble Lord to amplify the issues he has raised about conflicts of interest, Chinese walls and so on. I commend the order.

Motion agreed.

House adjourned at 6.05 pm.