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Clause 16
Code of audit practice
Mr. Wiggin: I beg to move amendment No. 27, in page 13, line 25, leave out subsection (4).
The Chairman: With this it will be convenient to discuss the following:
Amendment No. 28, in clause 16, page 13, line 33, leave out subsection (7).
Mr. Wiggin: This is a busy morning for some of us. In speaking to amendment No. 27, I shall include amendment No. 28. They are probing amendments concerning the audit practice code in clause 16.
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Amendment No. 27 seeks to delete subsection (4) in order to ascertain the Assembly's role in relation to the audit practice code. Before the Assembly gives its approval, can it amend the code? If it could, that would undermine the Auditor General's authority.
Amendment No. 28 removes subsection (7), because even after the code has been issued by the Auditor General, and has been approved by the Assembly, either House of Parliament can annul the code by statutory instrument. Can the Minister explain why that power is included, and in what circumstances it might be used?
Mr. Touhig: The amendment would remove the National Assembly's ability to approve a draft code of practice for the audit of local government bodies in Wales before its introduction by the Auditor General. The code would incorporate best professional practice with respect to standards, procedures and techniques to be adopted by auditors in the exercise of their functions. The provision enabling the Assembly to approve the code has been incorporated in the Bill as a result of representations made during pre-legislative scrutiny and public consultation on the draft Bill. Preliminary work is already under way by the National Audit Office in Wales and the Audit Commission in Wales in the preparation of such a code.
Similarly, amendment No. 28 would remove the ability of either House of Parliament to annul the draft code by negative resolution procedures. The provision for parliamentary consideration of the draft code was also included in the Bill in response to views expressed during consultation. Under the provisions of section 4 of the Audit Commission Act 1998, the express approval of Parliament is required in relation to the existing code of audit practice in England and Wales. It is appropriate that a code of practice discrete to Wales should be approved by the Assembly and, should it wish to do so, Parliament should also have the opportunity to scrutinise the code and comment on it.
Very significant sums of taxpayers' money fund local government services in Wales, and it is right that there should be an opportunity for democratic scrutiny of the way in which local government bodies are to be audited. That does not compromise the Auditor General's independence, because neither the Assembly nor Parliament would have the right to modify the code. In the very unlikely circumstances of the draft code not being approved, it would be referred to the Auditor General for further consideration. I think that I have answered the hon. Gentleman's specific point: the Assembly would not have the power to amend the code.
Mr. Wiggin: I am grateful to the Minister for his reply. The concern is that the Auditor General could be undermined by tweaking by the Assembly. The Minister has made it clear that that will not happen, and I am grateful for that, but in the negotiations during the preparation of the draft code, which would be laid before the Assembly, such a problem could exist. Clearly, the Assembly must have a say over the code, as it will have to live by it. Equally, the Minister
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will recognise my concerns that during the negotiation phase of any code before it was laid before the Assembly, there could be a similar problem. The same argument applies to the parliamentary element here: it is important that Parliament retains the power to annul the code by statutory instrument. I do not think that it ever will, but I recognise the value of leaving the provision in the Bill. We have expressed our concern about untoward behaviour taking place during the negotiations. I am sure, however, that that will never happen. I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 16 ordered to stand part of the Bill.
Clauses 17 to 23 ordered to stand part of the Bill.
Clause 24
Consideration of reports in public interest
Mr. Wiggin: I beg to move amendment No. 29, in page 18, line 4, leave out from 'are' to end of line 8 and insert
'those listed in section 12(1)'.
The Chairman: With this it will be convenient to discuss the following:
Amendment No. 30, in clause 25, page 18, line 37, leave out subsection (3).
Mr. Wiggin: We tabled the amendments to ask why there are various lists of bodies in the Bill. Amendment No. 29 would delete the four bodies that are listed in clause 25(3) and replace them with the nine bodies that are listed in clause 12(1). Amendment No. 30 seeks to delete clause 25(3) because we wish to establish why the four types of bodies receive different treatment. These have all doubtlessly been copied from existing legislation, which again highlights the wasted opportunity to consider the audit regime in Wales afresh. I look forward to hearing why those four have been picked out.
Mr. Touhig: Amendment No. 29, by requiring all local government bodies to consider reports as soon as practicable, would relax the requirement on the larger bodies. There would be no specific deadline, either of one month or any longer period by which they would be required to consider reports. That would be a retrograde step. The one-month deadline for the larger bodies is also consistent with the tighter time scale introduced on an England and Wales basis by the Local Government Act 2003. It reduced the time scale for consideration from four months.
Furthermore, the safeguards provided by clauses 25 and 26 are dependent on the distinction between the larger bodies subject to the one-month deadline and the smaller bodies. If the amendment were agreed to and the distinction were removed, the safeguards in clauses 25 and 26 would cease to apply. Those clauses require the larger local government bodies to make specific decisions in response to a public interest report
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within a definite time scale, and require minimum publicity for a meeting to consider the report and its subject matter.
Mr. Wiggin: I can see where the Minister is taking the argument about the sizes of bodies. Does he not feel that local authorities should perhaps have been included in that list of four?
Mr. Touhig: I shall return to that point in a moment.
The requirements set out in clause 24 as drafted make robust and pragmatic arrangements for the consideration of reports in the public interest. Amendment No. 30 would have the opposite effect, by imposing on the smaller bodies a definite timetable and process for considering certain written recommendations from their auditors. The fact that the smaller local government bodies are not currently subject to such requirements recognises their comparatively small administrative resource base and the fact that they meet with less frequency. I hope that that covers the point that particularly concerned the hon. Gentleman and that he will feel able to withdraw the amendment.
Mr. Wiggin: I am not sure, because I do not know the intimate details, whether an internal drainage board is larger or smaller than a local authority in Wales. I suspect that they are different in every case. Like most things in life there is no set of rules. The Minister's point that smaller bodies should not be under the same pressure as larger ones is a good one. I am not sure that we should be so generous in the Bill, but if that is what the Minister wants, there may be a better way of doing it. I am not suggesting that my amendments are perfect, but if the size of the body and the frequency with which it meets are the issues, we should perhaps specify those factors and force it to report in the way that the Minister has outlined.
11.15 am
In drafting the Bill, the Minister has obviously considered how things are today, but hon. Members will agree that we must think of most eventualities. I am not sure that he has done that. I would be grateful if the Minister could put my mind at rest. I am concerned that the size of the body and the frequency with which it meets are the only issues, because organisations such as police authorities, which are very important to people, should be as accountable as humanly possible. That is what we are trying to dig at.
Mr. Touhig: The hon. Gentleman asked why there are various lists of bodies in clauses 24 and 25, but there are only two lists. One set of bodies is larger and better resourced and tends to meet more frequently. I should also stress that local authorities are subject to more demanding requirements in the Bill, and we are following the right route on that. The other list is of smaller bodies. I hope that that explanation addresses the hon. Gentleman's concern about the difference in sizes.
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Mr. Wiggin: I am grateful for that reply, and it mollifies my concerns. We want to make progress this morning, so I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 24 ordered to stand part of the Bill.
Clauses 25 to 27 ordered to stand part of the Bill.
Clause 28
Additional publicity for non-immediate reports
Mr. Touhig: I beg to move amendment No. 48, in clause 28, page 21, line 16, leave out 'body' and insert 'auditor'.
The amendment corrects a minor error in clause 28. Subsection (3)(b) enables a member of the public to obtain, on payment of a reasonable sum, a copy of a non-immediate public interest report prepared by an auditor under clause 22 in respect of an audited body's accounts. It states that a copy of the report should be supplied by the audited body, but the reference should be to the body's auditors. The amendment corrects that mistake, and I commend it to the Committee.
Amendment agreed to.
Clause 28, as amended, ordered to stand part of the Bill.
Clause 29 ordered to stand part of the Bill.
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