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Local Audit (Public Access to Documents) Bill

Volume 782: debated on Thursday 6 April 2017

Second Reading

Moved by

My Lords, I am pleased to be supporting this Bill through the House and believe it adds a valuable dimension to existing inspection rights and local accountability for relevant authorities. The complete list of bodies to which the Bill will apply is set out in Schedule 2 to the Local Audit and Accountability Act 2014, which this Bill amends.

The Bill will extend the definition of interested persons to include journalists, which includes citizen journalists, so that they may access a wider range of local audit documents to assist with their investigations and publicise their findings, so that local electors are made aware and thus better able to hold their council to account for its actions through questioning the auditor or making an objection. It is important to emphasise that it will not allow journalists themselves to question the auditor or make an objection. Given that the cost of the auditor investigating a question or objection is met by the local body concerned, and given the cost of such action to the local public purse, this right should be exercised only by an elector in that area, who could be impacted by those costs. As an ex-chairman of the Local Government Association, I firmly believe that openness and transparency should be the default position in local government. In my view, this short and simple Bill will assist in achieving that aim.

In the other place, there was some debate over the merits of extending these rights to all UK registered electors. While the amendment that would have implemented that change was ultimately withdrawn, my strongly held view is that extending this right to all would be wrong for several reasons. While Ministers clearly flagged their intention back in 2014 to extend the inspection rights for accounting information to journalists in order to assist them in their investigations, they did not suggest extending such rights to all and sundry. Extending these rights to everyone without any consultation as to the impact would vastly expand the potential for mischief-making without any wider public benefit, as well as potentially placing a cost burden on local public bodies.

Other provisions in the Local Audit and Accountability Act 2014 already require local government to publish a wide range of information, including financial data, through adherence to transparency codes. However, the ability to inspect the financial records of the year just ended for 30 days and before they are signed off by the auditor is a separate right that can be exercised only by interested persons and local government electors for the area concerned. This is because such persons have the right to inspect a wider range of information than just the final accounts, which are required to be published. Electors in the area may also question the auditor or make a formal objection to the accounts, which may require the auditor to investigate and could prevent closure of the accounts until the investigation is complete.

To allow anyone to inspect this wider range of accounting information could result in a greater cost burden on local authorities, as there would be a far greater volume of requests to fulfil, with associated administrative costs in locating the documents requested. Such costs could be regarded as a new burden on the authority, because we would be asking them to do something they have previously not been required to do, and which would therefore need to be funded by the department. Extending an existing right to a defined group of people would not be considered in the same light.

To those who think that by extending this right to citizen journalists, we are in effect opening the floodgates, I say that the wording in the Bill helps to define who might reasonably be expected to fall within that category. By referring to “journalistic material” the focus is on what the person does and would suggest that such a person would be able to provide details of blogs or tweets they had authored and the forums in which they had been published. Furthermore, use of the term “publication” implies a public element. Therefore, while it might include journalistic material tweeted on Twitter, it may not include material circulated to a small invite-only Facebook group. It is also unlikely to include material sent as a direct message on Twitter, Facebook or by email. The onus would be on the citizen journalist to provide proof. Such a person should be able to provide details of articles, blogs or tweets they have authored and where they have been published in order to gain the ability to inspect the accounting documents requested from the local authority.

The other key issue debated in another place last week related to health bodies and why they are excluded from this Bill and, indeed, from the inspection provisions in the 2014 Act. I am going to leave it to my noble friend Lord Bourne of Aberystwyth to set out the Government’s view on how that issue relates to government policy.

Given my attempts to further address the key points raised last week in the other place, I am hopeful that noble Lords present here today will feel able to support this small but important measure. I beg to move.

My Lords, I refer the House to my entry in the register of Members’ interests. I am an elected councillor of the London Borough of Lewisham and a vice-president of the Local Government Association.

I congratulate the noble Baroness on bringing forward the Bill for debate today, which has the full support of the Opposition. We will not table any amendments to it and urge all noble Lords to do likewise. We wish it a speedy passage through this House and hope it will receive Royal Assent soon afterwards.

The Bill is short and, in effect, makes only one important change. It will allow journalists to inspect accounting records of the public bodies listed in Schedule 2 to the Local Audit and Accountability Act 2014 for one month without being required to have an interest in the authority, as the noble Baroness, Lady Eaton, explained to the House. Those who spend public money should be accountable to the public for how they spend it and what they spend it on. The Bill goes a considerable way towards improving the present position, and that is to be welcomed.

The Bill is necessary because the “interested person” test goes only so far. It goes beyond a registered elector but not as far as to include a journalist. The definition of “journalist” has been written in such a way as to include bloggers and others who may not be seen as conventional members of the media, but perform a valuable function in covering the activities of local public bodies and questioning them. This is to be welcomed as their efforts are of benefit to the local community and local taxpayers.

I do not expect to see a stampede of journalists or bloggers heading down to their local town hall to inspect the invoices and receipts for the coffee machine in the members’ room or anywhere else, because there are provisions in the Act to deal with vexatious requests. This is important because some people go beyond what is reasonable and see conspiracies and corruption where people have acted perfectly properly. Simply not liking a decision does not mean that it was not a perfectly lawful decision to take. It is important that there is a protection for members of local authorities.

Anyone who has been on a council or is a Member of this House or the other House will have had to cope with losing a vote every now and again. That is part of our democracy. I always believe that anything I put forward from this Dispatch Box is worthy of support from the whole House, but that is not always the case. The actions of journalists can alert the local community to some of the decisions taken in its name, raise questions about how the money has been spent and lead others to question whether the actions taken are the most appropriate use of public money—of their money.

The period for allowing inspections is limited to one month. While looking at the documents is free, the local body can make a reasonable charge to cover its costs where copies of documents are taken. That is sensible as all public bodies have to think carefully and account for their money, which is tight at the moment.

I welcome the Bill and wish it a speedy passage through the House in the next few weeks.

My Lords, I am pleased to speak today on behalf of the Government in support of the Local Audit (Public Access to Documents) Bill, introduced by my noble friend Lady Eaton. I thank her for her sterling efforts on this legislation. She comes to the task with vast experience of local government. I also thank the noble Lord, Lord Kennedy, for his typically responsible position on scrutinising legislation and for his kind and appropriate words in relation to the efforts of my noble friend Lady Eaton on the Bill.

It is absolutely right that both the Government and the Opposition should seek to provide appropriate accountability, and we both believe that this is a necessary extension of what exists at the moment. Transparency is important. The disinfectant of light on what happens in public proceedings in Parliament, council chambers and other elected bodies is absolutely right.

I also thank my honourable friend Wendy Morton MP, who has taken this legislation through the other place, for her efforts in relation to it.

On the noble Baroness’s earlier comments, this Bill is small in size but important in relation to the Government’s transparency agenda. This is why the Government are happy to support it. We believe that its potential impact in assisting local transparency and accountability will help local electors better to understand their local authority’s spending decisions. If they are unhappy with those decisions and something deserves scrutiny, those electors will then be able to ask a question of the auditor or raise an objection to a particular matter. That action would then empower the auditor to investigate further before the accounts are closed. The 30-day timing before the sign-off will enable the auditor to seek corrective action, where appropriate, from the authority—perhaps by making recommendations for change in the audit report—to comment on value-for-money judgments made by the council, or, in the most serious cases, to issue a public interest report, which the council is required to consider publicly and respond to.

Some have suggested—although not today—that a freedom of information request would have a similar effect. However, that would require the requester to know to some extent what they want before seeking information. Furthermore, unlike these rights, it cannot directly result in preventive action or change in relation to the most recent years’ accounts. That is why we believe that this Bill, though small in size and provisions, will potentially make a considerable difference.

My noble friend Lady Eaton kindly suggested that I pick up the point in relation to health bodies, which are excluded from, among other things, the inspection rights in the Local Audit and Accountability Act 2014 and are, consequently, also excluded from this Bill, which amends that Act. This is because local health bodies are not directly accountable to the local electorate in the same ways as local authorities. The National Health Service Act 2006, as amended by the Health and Social Care Act 2012, enables residents and patients to see the accounts of clinical commissioning groups and NHS trusts. However, the local auditors of health service bodies are required to report unlawful expenditure to NHS England or the NHS Trust Development Authority—which now, since 1 April, forms part of NHS Improvement—of clinical commissioning groups or NHS trusts respectively, and to the Secretary of State.

The accounts of all of the health service bodies covered by the 2014 Act are consolidated into the resource account of the Department of Health, which is presented to Parliament and subject to audit by the National Audit Office. The expenditure of those bodies is also within the scope of the Comptroller and Auditor General’s value-for-money remit under the provisions of the National Audit Act 1983. In general, foundation trusts are not covered by the 2014 Act. They are responsible for appointing their own auditors under paragraph 23 of Schedule 7 and Schedule 10 to the NHS Act 2006. The rules governing audit for these bodies are set out in that Act. In short, that is why the health bodies are not encompassed by the 2014 Act and hence not in the Bill. I hope that that demonstrates why they are excluded.

Unlike health bodies, local authorities are directly accountable to their electorate, and it is therefore only right that local people should be able to inspect their accounts in order to ask questions of the auditor and potentially object to items of expenditure. This Bill, by enabling journalists to inspect accounting records and publicise what they find, has the potential to bring this information to the wider attention of local electors, who will then be empowered to act by asking the auditor questions or by making an objection, thus triggering an investigation.

Points have been made in relation to this legislation that it might potentially result in auditors receiving a large number of questions or objections. I agree with the noble Lord, Lord Kennedy, that it is not foreseen that there will be a stampede of journalists taking up this right. It does not seem that that is going to happen. Currently the number of objections and questions received from local electors is very small—last year only around 65 from more than 11,000 audited bodies. While the publication of articles detailing high or unorthodox expenditure in an area could result in a number of local electors asking questions of the auditor, the number who will take the next step is likely to remain small, especially given the 30-day timeframe.

In closing, I once again thank my noble friend Lady Eaton. I hope that I have been able to reassure noble Lords on the two specific issues of health bodies and the likely number of people who will take up this right. I echo the words of my noble friend and of the noble Lord, Lord Kennedy, by encouraging all noble Lords to support the Bill.

My Lords, I thank the noble Lord, Lord Kennedy, for his encouragement and support for the Bill and I thank my noble friend Lord Bourne for his clarifications and for stressing its importance.

Bill read a second time and committed to a Committee of the Whole House.