Draft Audit Commission (Borrowing Limit) Order 2002

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Mr. Moss: I ask the Minister a simple question: how can he justify asking councils the length of breadth of England to cough up an extra 175 million from resources that should be spent on other things, simply to operate a discredited system?

Dr. Whitehead: As I suspected, the hon. Gentleman has not reflected on the history of the Audit Commission and the fact that auditing and inspecting has always resulted in some costs, as has the dissemination of best practice in local government. The fact that local government pays for that from its income has always been the case.

I am addressing the issue of how the best-value regime works and how well it is working. I have stated that the White Paper will describe how the system will be streamlined and that good performance in best value will be linked directly to the receipt of operational freedoms. Best value will work increasingly effectively under the new performance arrangements that the Government have set out in the White Paper.

I remind the hon. Gentleman that we are discussing whether the Audit Commission should be allowed sufficient overdraft facilities to operate effectively. Surely it would be desirable to have a commission that is able to function properly, prudently and reliably in discharging its obligations. I also remind the hon. Gentleman that those obligations were given to the commission not by this Government but by the last Conservative Government. Changing the level of the overdraft facility from what was arranged in 1983 to that which we might sensibly suggest for 2002 is at the heart of the proposal.

Mr. Moss: It is my understanding that the level of borrowing was set not in 1983, but in 1998. Will the Minister confirm that?

Dr. Whitehead: The 3.5 million overdraft covers about 2.5 per cent. of the gross income to the year ending 31 October 2001, but represents nearly 25 per cent. of the 1983 income figure. Therefore, the change in overdraft level reflects the increase over the years in the sum that the commission has to administer, in terms of its daily working.

I hope that the Committee agrees that the commission seems to require a sensible overdraft limit of 12 million so that it can function according to its present responsibilities. The order will ensure that the commission operates in a prudent way.

Question put and agreed to.


    That the Committee has considered the draft Audit Commission (Borrowing Limit) Order 2002.

Committee rose at one minute past Five o'clock.

Column Number: 011

The following Members attended the Committee:
Cran, Mr. James (Chairman)
Brazier, Mr.
Dalyell, Mr.
Ennis, Jeff
Gilroy, Linda
Hoey, Kate
Hoyle, Mr.

Column Number: 012

Mandelson, Mr.
Meale, Mr.
Moss, Mr.
Prosser, Mr.
Whitehead, Dr.
Woolas, Mr.

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