Clause
106
Involvement
of local
representatives
Question
proposed, That the clause stand part of the
Bill.
Angela
E. Smith:
The clause is a key plank in the
Government’s commitment to ensuring greater engagement and
empowerment of local communities. It will insert a new section 3A into
the Local Government Act 1999 placing a duty on best value authorities
in England, except police authorities, to involve representatives of
local persons in the exercise of authority functions where
appropriate.
Authorities
will need to consider if and how local representatives should be
informed of, consulted on and/or involved in local authority decisions.
It will be for the authorities themselves to determine the most
appropriate means of involvement, but they must have regard to any
guidance issued by the Secretary of State. Within those existing
powers, authorities will be able to involve local people directly in
management and in decision-making
responsibilities.
The
leverage provided by the duties is essential to ensure that authorities
engage appropriately with local communities. It will provide an
important counterbalance to the reduction in top-down controls in the
new performance framework. A number of authorities already inform,
consult and involve local people, but not all of them do. We want all
people, irrespective of which authority area they live in, to benefit
from greater engagement and
empowerment.
Several
mechanisms will provide recourse should an authority not meet
requirements of the duty. Risk assessment, audit and inspection will
have a greater focus on outcomes for citizens, including consideration
of how an authority is meeting the duty. That will be an external
challenge to authorities and may lead to closer inspection if they are
found wanting.
National
performance indicators, including citizen perspective indicators, will
also be published to increase accountability not only to inspectorates
and partners
but to local people. If the indicators show cause for concern, it could
lead to additional inspection or to challenge from peers or from local
people who raise a community call for action. The new overview and
scrutiny arrangements will also provide an opportunity, if an authority
appears to be failing in its duty, for internal challenge by
councillors. Should the issues be raised by a community call for
action, that in turn could be examined by overview and
scrutiny. The clause
will provide the Secretary of State with powers to make additional
exemptions from the duty using secondary legislation subject to the
negative resolution procedure. It will not provide authorities with any
additional powers, and is therefore not a duty to devolve. I commend
the clause to the
Committee.
Mr.
Syms:
I welcome the Under-Secretary’s making that
clear to the Committee. She spoke about the involvement of local
representatives. Were any of those community organisations or local
representatives involved in the standards issue? People representing a
particular body do have interests when they are
consulted.
Angela
E. Smith:
That would be a matter for the Standards Board
to consider. There is not a direct relationship, but the board will
consider all matters in the normal way. I think that that will give
local residents some comfort and
clarity.
Question
put and agreed
to.
Clause 106
ordered to stand part of the
Bill.
Clause
107 to 112 ordered to stand part of the
Bill.
Schedule
8 agreed
to.
Clause
113
Membership
Question
proposed, That the clause stand part of the
Bill.
11.15
am
Mr.
Syms:
Given that we are now debating the constitution of
the Audit Commission, I should be grateful if the Minister gave us an
overview of the changes in this part of the Bill. I may have questions
after I hear what he
says.
Mr.
Woolas:
We have moved swiftly to clause
113.
The
policy behind the clause is, first, to ensure that the Audit Commission
fulfils the purpose for which it was established and is seen to be
focusing on that. The Audit Commission was established to help local
authorities to control their costs. That was its prime objective.
Labour Members may recall that the Audit Commission was established by
the then Prime Minister, now Baroness Thatcher, as part of what was
described at the time as an onslaught on local government. That was in
the days when central Government was not a friend of councils, unlike
the present time, when consensus is the order of the
day.
Teasing
apart, my serious point is that it is often forgotten that the Audit
Commission is there to oversee the books and to ensure that value for
money and
efficiency are achieved. The Audit Commission has been a huge help to
local authorities in meeting those goals, as we saw again last week in
the announcement of findings of the comprehensive performance
assessment, which is the second part of the policy in which the changes
are set. Controversial though the comprehensive performance assessment
was at the time of its introduction and painful though it has
occasionally been, it has fulfilled its purpose of securing a general
improvement in the quality of local government service provision. Those
are the two policy contexts. I am grateful to you, Mr.
Chope, for allowing me
leeway.
To
respond to the hon. Member for Poole, clause 113 reduces the number of
Audit Commission board members from the current minimum of 15 and
maximum of 20 to a minimum of 10 and a maximum of 15. The number of
commissioners that is currently prescribed is more than the ideal
number for incisive debate of strategic issues. It is a bit too big and
unwieldy. The Audit Commission has been carrying vacancies on its board
for almost two years and is operating with only 13 members. Experience
shows that that is a sufficient number to carry out the relevant
functions. The Audit Commission’s chair and chief executive have
expressed the view that the statutory requirement should be decreased
as proposed. We are about to embark on a recruitment exercise to bring
the number of board members up to 15 from this
summer.
The proposals
have been advanced by the chair and the chief executive of the Audit
Commission and I believe that 10 to 15 board members are sufficient for
proper decision-making experience and proper scrutiny of the Audit
Commission’s work, without being unwieldy and over-bureaucratic.
It is a question of balance and judgment. I think that it is best to
take the advice of the chair and the chief executive and agree to the
change.
Mr.
Syms:
I am happy with what the Minister
said.
Sir
Peter Soulsby (Leicester, South) (Lab): I wish to speak
briefly about the size of the Audit Commission board. I was a member of
it some years ago and I can confirm what the Minister said. Even at
that stage, it was felt that the 15 to 20 size was above the optimum.
The reform to reduce its size will make it more manageable. It will
continue to provide proper oversight and enable good representation of
those who have an interest in the work of the commission. In addition,
governance will be significantly
improved.
Question
put and agreed
to.
Clause 113
ordered to stand part of the
Bill.
Clauses
114 and 115 ordered to stand part of the
Bill.
Clause
116
Benefits
Fraud Inspectorate: transfers to the Audit
Commission
Amendment
proposed: No. 141, in clause 116, page 82, line 17, leave
out ‘an order’ and insert ‘a
scheme’.—[Angela E.
Smith.]
Mr.
Syms:
I should be grateful for a little more explanation
of the amendment.
Angela
E. Smith:
The hon. Gentleman tempts me to admit my
embarrassment about the fact that the amendment was tabled because of a
typing error in clause 116(3). It is helpful that we can correct that
error today. The current
wording:
“Before
making an order under this section, the Secretary of State must consult
the Audit
Commission”
suggests the
need for a statutory instrument. That is not the case. The scheme
essentially requires the consent of the Audit Commission and, more
importantly, the staff concerned. The amendment merely corrects that
error.
Amendment
agreed
to.
Clause 116,
as amended, ordered to stand part of the
Bill.
Schedule
10 agreed
to.
Clause
117
Interaction
of the Audit Commission with other
authorities
Question
proposed, That the clause stand part of the
Bill.
Tom
Brake:
I seek clarification from the Under-Secretary on
one point. I understood that the Audit Commission was concerned about
whether, at the request of local authorities, it would be able to
provide them with advice on an ad hoc basis. Is my understanding
correct? Will the hon. Lady explain whether the Audit Commission will
be able to deal with an ad hoc request made by a local
authority?
Mr.
Dunne:
It is my understanding that the Audit Commission
receives 20 to 30 requests a year from local authorities to undertake
investigations of various natures, from which it derives some income. I
shall appreciate the Minister clarifying whether the ability of local
authorities to request a review outside the normal annual review by the
Audit Commission will continue if the clause is agreed
to.
Angela
E. Smith:
I am grateful to hon. Gentlemen for their
comments. I hope that I can do justice to them and address their
concerns. The clause replaces section 37 of the Audit Commission Act
1998 with a wider power for the Audit Commission to provide advice or
assistance. Section 37 enables the Audit Commission to provide
assistance to certain named inspection bodies such as Ofsted and Her
Majesty’s chief inspector of prisons, and to charge for such
assistance. The clause also inserts in the 1998 Act new schedule 2A, as
set out in schedule 11, which makes provision for the interaction of
the Audit Commission with various persons and bodies in the exercise of
its inspection and studies function. If we take into account clause
122, I can extend the debate and that may help in later
discussions.
Clause
122 repeals sections 35 and 35A of the 1998 Act, which allow
the commission to undertake fee-paid improvement studies of certain
bodies at their request, or in some cases at the request of the Mayor
of London. When we were considering such matters, we saw that there was
a potential conflict of interest arising through the same body offering
both improvement support
and inspection, in effect, operating as a critical friend and as an
external regulator. Concerns have been expressed that this might lead
some bodies to consider buying improvement services from the commission
to obtain a better result at inspection. Commission inspectors could
then be called on to judge impartially improvement work carried out by
their colleagues.
There is also
a value for money issue. The Government already fund the Improvement
and Development Agency, the IDeA, to carry out improvement work and the
commission—also a publicly funded body—should not be
competing in the same market for fee-paid improvement work.
We took on board comments made
on Second Reading. We are considering our policy regarding the Audit
Commission’s powers to offer improvement advice. The comments
made on Second Reading were quite scurrilous in some cases, referring
to the opportunity to give money to private companies. That is not the
case at all. I have outlined to the Committee the concerns that have
been raised about the conflict of interest. We are reconsidering our
policy and we want to discuss the issue further with the
commission.
I hope
that this has helped the hon. Gentlemen. The matter is being discussed
and it is being looked at. I hope that satisfies the
Committee.
Mr.
Syms:
With the transfer of the benefit fraud inspectorate
into the Audit Commission, will the commission, at the request of the
Benefits Agency, be able to give advice on whether they can save money
and how better to run their organisation? Is that still a two-way
street?
Angela
E. Smith:
Yes, it is.
Question put and agreed
to.
Clause 117
ordered to stand part of the
Bill.
Schedule
11
Interaction
with other
authorities
Mr.
Woolas:
I beg to move amendment No. 144, in
schedule 11, page 150, line 38, at
beginning insert ‘Subject to paragraph
9(2A),’.
The
Chairman:
With this we may take Government amendments Nos.
145, 146, 142, 143 and 148 to
150.
Mr.
Woolas:
We shall continue the double act. On the matters
which have just been raised, I am amazed not to have heard cheers and
seen thank-you notes passed from Opposition Members for the fact that
the Government listened to the arguments put to us.
New schedule 2A amends the 1998
Act, which makes provision for the interaction of the Audit Commission
with various public authorities. Part 1 of the new
schedule—paragraphs 1, 2 and 3—sets out the other
inspectorates, referred to as “inspection authorities”,
and public bodies with which the Audit Commission will interact over
inspections, and defines “public authority” and
“inspection”.
Paragraph 4 requires the Audit
Commission to list the inspections that it proposes to carry out and
the way in which it will do them. Before drawing up the programme, the
commission must consult the Secretary of State, the inspection
authorities and any other body specified by the Secretary of State,
unless that requirement is waived by the body concerned. That might
occur where the commission is not proposing to inspect any bodies
within the remit of a particular inspectorate, so there would be no
benefit gained from consulting that body. Paragraph 5 provides the
Audit Commission with a gatekeeper role in relation to the inspection
of local authorities.
What we are proposing—I
hope it will be accepted—is a good act of joined-up government.
The Government’s policy is to reduce the number of inspectorates
from 11 to four, but councils complain not only about the number of
inspectorates that can come in and inspect their various functions, but
about the apparent and often real unco-ordinated way in which those
inspections are carried out. At its most extreme, that can debilitate a
local authority’s ability to do its business. Indeed, at the end
of the spectrum is the poor old Isles of Scilly unitary authority which
has five local government offices which were subject to more than 250
days of inspection the year before last. There are other examples that
I could give.
11.30
am
We are trying
to put in the gatekeeper role so that the lead inspectorate body for
the public services in question—in the present case, local
councils and the Audit Commission—can act as a gatekeeper to
co-ordinate other inspectorates, such as the children’s
inspectorate. That gatekeeper role is made real by paragraph 5 of the
proposed new schedule. In essence, the Audit Commission will be able
issue a notice to prevent a proposed inspection by another inspection
authority from going ahead if it considers that the inspection or the
manner of that inspection will impose an unreasonable burden on the
inspected organisation.
The
Secretary of State will specify which organisations are covered by the
gatekeeper provisions. I expect that the Audit Commission and the other
inspection bodies will discuss and agree the programme before formal
consultation takes place. The Secretary of State will have reserve
powers to allow inspections, as Parliament and local authorities may
require in certain circumstances. That is what we are trying to achieve
and it is consistent with other areas of Government policy. I think
that it is to be generally welcomed. [Interruption.] Apologies
on behalf of my hon. Friend the Whip. He has got many ways of telling
me to get a move on, and I am grateful to him for that.
Paragraph 9 of proposed new
schedule 2A was intended to confer a power on the Audit Commission to
provide advice or assistance to other public authorities in England and
to named audit bodies in Scotland, Wales and Northern Ireland. We now
wish, after consultation, to extend the scope of that power to allow
the Audit Commission to provide advice or assistance to other public
bodies outside the United Kingdom and to any public authority within
the devolved Administrations. We consider that the provision of advice
or assistance will only be a small amount of work, but it will allow
the Audit
Commission to share its expertise and knowledge overseas. We believe
that that would be a valuable export and attribute to our country in
our reputation overseas. We are the best at public sector auditing and
we ought to give our commission the ability to use that expertise
overseas. It could help to generate an income stream for the Audit
Commission and to increase the body of knowledge and expertise that it
has and it will be good for the United Kingdom’s reputation
overseas. We intended
that the commission be able to charge a fee for carrying out work at
inspection authorities, with the requirement that it obtain consent
from the Secretary of State to charge a fee to other public bodies.
That was to ensure that the advice or assistance function did not
become onerous and lead to the commission straying from its core remit
and to ensure that the commission did not use the power to reintroduce
its voluntary improvement work which was to be repealed under clause
122. We now wish for that consent requirement to be removed for the
reasons that I have given. The Audit Commission has offered assurance
on both of those points and there is an added comfort that the
commission’s core remit of audit and inspection are statutory
duties, so that it is obliged to carry them out.
In practice, the commission
would only provide advice or assistance at the request of another body,
so there would be a natural limit on the demands upon it. In view of
that, we are proposing that there should not a consultation for
charging for advice and assistance either in the United Kingdom or
abroad. My hon. Friend the Under-Secretary has already referred to our
wish to amend clause 122 in the light of the representations made, the
discussions in Committee, and the points made at the evidence stage and
on Second Reading. Once again, I hope that the Committee will agree
that we are adopting a sensible and open
approach.
Sir
Peter Soulsby:
I welcome the proposals that the Minister
has outlined. In particular, I welcome the initiation of a clear
gatekeeper role, which will involve giving one body the lead
responsibility. That lead role will ensure the co-operation and
co-ordination of inspection that has often been lacking in the
past.
In general, I
welcome the reduction of the overall burden of inspection and the
proposals that will lead to a reduction of the number of inspectorates.
The problem is not only lack of co-ordination between inspectorates,
but the multiplicity of them.
I also welcome the intention
that underlies the proposals to tailor inspection to an assessment of
risk in the real world. Inspection has in the past been perceived as
the ticking of boxes regardless of realities on the ground and the
importance of the services being inspected. I welcome the proposals and
the intention that lies behind them, and I hope that the measures lead
to joined-up inspection.
Mr.
Woolas:
I am grateful to my hon. Friend, who speaks with
the benefit of having been the leader of a major local authority. My
observation from experience is that valuable auditing exercises can
become tick-box exercises as people gain more experience in the
inspection regime. That does not invalidate the purpose
and remit of the inspectorate regime as envisaged—I am not
disparaging the findings of that regime. It was put to me by one chief
executive that there is a difference between learning how to pass
one’s driving test and learning how to drive. Although the
driving test is a good test of whether one can drive, the experience of
driving is different. That type of argument becomes more attractive the
older one gets, but I am grateful for my hon. Friend’s
endorsement.
Amendment agreed
to.
Amendments made:
No. 145, in schedule 11, page 154, line 13, after
‘terms’
insert
‘, including terms
as to
payment,’.
No.
146, in
schedule 11, page 154, line 14, leave
out sub-paragraphs (3) to (5) and
insert—
‘(2A) In
sub-paragraph (1), the reference to another public authority includes a
public authority outside the United
Kingdom.’.—[Mr.
Woolas.]
Schedule
11, as amended, agreed to.
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