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6.30 pm
My second question relates to an even bigger difference between the commission’s recommendation and what is proposed in the Bill. It concerns circumstances in which the Comptroller and Auditor General, after leaving office, proposes to take up employment with a body that has previously been within his or her jurisdiction for the purposes of audit. The Bill imposes an absolute ban on such appointments for a limited period of two years.
The commission, taking a much stricter view, suggested a lifelong ban, stating:
“It is obviously essential that subsequent employment could not be seen as a reward for actions taken while C&AG, and for that reason there should be a lifetime prohibition on a C&AG or former C&AG accepting any post in any body which the NAO has audited or which is in the gift of the Government.”
Given the very proper concerns that have been expressed throughout the debate about the independence of the Comptroller and Auditor General and the commission’s clear recommendation of a lifetime ban, I simply ask the Government why they have opted for such a short period.
Mr. Alan Williams: The proposal relating to the advisory committee is certainly what we originally recommended. I think it was then suggested that there might be a more appropriate body at the time, and that the arrangement should therefore be left open. It was not a case of precluding what had been proposed originally; it was merely a case of leaving things open so that a decision could be made at the time.
We considered the lifetime ban, along with various other options. The Treasury’s advice was that a lifetime ban would be an infringement of human rights and was disproportionate, but also that it would deter younger applicants looking 10 years ahead who might feel that their options would be severely limited when they retired.
Sarah McCarthy-Fry: As we have established this afternoon, the office of the Comptroller and Auditor General was set up to hold Government to account. We have legislation that enshrines in law a requirement to ensure that the Comptroller and Auditor General is, and is seen to be, independent of any and all outside influence, particularly that of the Executive. The arrangements for appointment, remuneration and removal from office in the national audit provisions of the Bill are intended to ensure that external considerations cannot influence the judgments that the Comptroller and Auditor General needs to make in scrutinising the Government’s use of public resources on behalf of the House of Commons.
That sets clause 42 in context. Let me now turn to the amendments, beginning with amendment 31. Clause 37, to which the Committee agreed earlier, limits the Comptroller and Auditor General’s term of office to a maximum 10-year single term. It is likely, therefore, that a Comptroller and Auditor General could have a lengthy working life once he had left office. Mindful of that, the Government have put in place measures to ensure that the hope of future employment could not influence a Comptroller and Auditor General’s judgments while in office. That consideration was also important to the Public Accounts Commission, from whose proposals the provision derives.
The CAG needs to focus all his efforts on carrying out his role without fear or favour right through to the end. Clause 42 therefore restricts a former CAG from working for the Crown or providing services to persons acting on behalf of the Crown for a period of two years after they cease to be CAG.
Mr. Tyrie: Will the definition of working for the Crown be the same as the definition that will be used for determining who is a civil servant under the civil service clauses of the Bill?
Sarah McCarthy-Fry: Off the top of my head, I cannot guarantee that, but I will endeavour to get a response to the hon. Gentleman before I finish speaking; alternatively, I will write to him.
After two years, a former CAG must take advice from a person nominated by the Public Accounts Commission before taking up other employment of a kind specified by the commission. If amendment 31 is approved, the two-year ban will be removed. The effect of that will be to impose, through subsections (5) and (6), a lifetime restriction on public sector employment for a former CAG. The commission originally recommended that a former CAG should not be eligible at all to take up other employment in the public sector after their term of office. It later recommended a five-year ban. As was said by the Father of the House, the legal advice cautioned there was a real risk that a permanent ban on public sector employment would be found indirectly discriminatory on age grounds.
The Government accept the importance of the CAG’s independence, but we think that any restraints on future employment must be proportionate and within the law. A lifetime ban goes much further than what is required to protect the CAG’s independence since it is hard to believe that a serving CAG could be influenced in any real sense while in office by a distant and, by its nature, highly uncertain prospect of remunerated work. Moreover, such a ban is likely to deter candidates, particularly younger ones, from applying for the post of CAG, which is not in anyone’s interests.
As I have said, there is a real risk that a permanent ban on public sector employment would be found indirectly discriminatory on age grounds. Moreover, if such an infringement were found, it is unlikely that it could be defended as being reasonably necessary and objectively justifiable. A lifetime ban is therefore neither necessary nor desirable.
On amendments 29 and 30, the 15th report of the Public Accounts Commission recommended a lifetime ban on former CAGs accepting any post in any body that the National Audit Office has audited or which is in the gift of Government. It was in this context that the commission considered that some conflicts of interest could arise over posts in the private sector with, for example, defence contractors or other suppliers to the public sector. The commission therefore recommended that the CAG should consult what has been called the “Advisory Committee on Public Appointments”. In fact, the correct title of the body is the Advisory Committee on Business Appointments.
Subsection (2) allows the Public Accounts Commission to nominate a person to advise former CAGs on taking up future offices or appointments. The advantage of the current drafting is that it allows the Public Accounts Commission to decide which person to consult depending on the circumstances at the time. It is therefore capable of adapting to future changes, for example should the name or responsibilities of the adviser change. That advantage should be obvious to Members already since, in attempting to be more specific, the amendment names a body that does not exist. There would, of course, be nothing to stop the commission specifying that the advice should be taken from the chair of the advisory committee if it so wished.
Turning briefly to Amendment 30, if subsection (3) were to be deleted, as proposed, not only would the Public Accounts Commission be unable to specify the adviser, but it would be unable to specify the description
of offices, positions, agreements or arrangements. Therefore, a side effect of the amendment would be to create uncertainty about which positions are covered by subsection (2).
With that explanation, I hope the hon. Member for Cambridge (David Howarth) will consider withdrawing his amendment.
David Howarth: Yes, of course I will seek leave to withdraw amendment 29, and I thank the Government and the Father of the House for the explanation offered as to the change. It makes sense for this provision to be more flexible and to take into account the chance that the appropriate body to consult might change.
I shall not be pressing amendment 31 to a Division either, but the explanation that the Minister offered is slightly puzzling, in that the chances of this indirect discrimination happening and affecting anybody are remote. As I understand it, the argument put forward was that as a younger person would face a longer ban, in terms of years, than an older person, disproportionately more younger people, as opposed to older people, would be put off and that would therefore qualify as indirect discrimination on age grounds against the young. I suppose that is theoretically possible in some remote circumstance, but it does not strike me as the most obvious discrimination case that anyone would bring, especially when one considers the consequence of bringing such a case for one’s career.
The reason for the two-year ban has not been entirely explained. The Minister mentioned the possibility of a five-year ban—I am not entirely clear about in what circumstances the commission suggested a five-year ban—but she did not offer any particular reasoning as to why the ban should be for two years, rather than for five. Given that the whole point of this clause is to maintain public confidence in the neutrality and independence of the CAG, if anything we should err on the side of caution.
Sarah McCarthy-Fry: We obviously obtained the views of the commission and considered them carefully. We think that the two-year period achieves a sensible balance between the need to ensure the independence of the CAG and the desire to allow a former CAG to continue their career in the private or public sector, if they so wish. The two-year period is based on that for Ministers who wish to take up outside appointments.
David Howarth: That explains things, and I thank the Minister. Obviously the issue here is whether someone could be made such a big offer of such a big job and such a large salary that they might be tempted by it, even with a two-year delay. I recognise that that is somewhat unlikely, even in the public sector of today. With that, I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 42 ordered to stand part of the Bill.
Clause 43 ordered to stand part of the Bill.
Clause 44 ordered to stand part of the Bill.
Sarah McCarthy-Fry: I beg to move amendment 41, page 21, line 25, leave out ‘must’ and insert
‘and the Comptroller and Auditor General must jointly’.Clause 45 sets out the arrangements for the NAO’s expenditure and the approval of its estimates. Government amendment 41 is a minor amendment, which provides for the CAG to prepare the NAO estimates jointly with the NAO. The Bill already provides that the estimate, once prepared, will be presented to the Public Accounts Commission jointly by the CAG and the chair of the NAO.
Clause 45, as amended, ordered to stand part of the Bill.
6.45 pm
Clauses 46 to 49 ordered to stand part of the Bill.
Sarah McCarthy-Fry: I beg to move amendment 42, page 71, line 20, at end insert—
‘Government of Wales Act 2006 (c. 32)22A In paragraphs 5 and 8 of Schedule 5 after “Comptroller and Auditor General” insert “or the National Audit Office”.’.This is a minor and consequential measure. If part 7 is enacted, certain functions carried out by the Comptroller and Auditor General will in future be carried out by the new National Audit Office. The amendment will prevent the provision of an Assembly measure from modifying the functions of the National Audit Office without the consent of the Secretary of State. A similar provision already applies in relation to the functions of the Comptroller and Auditor General.
Schedule 9, as amended, agreed to.
Clause 50 ordered to stand part of the Bill.
‘(1) Schedule 5 to the Government of Wales Act 2006 (c. 32) is amended as follows.
(2) In Part 1, under Field 14, insert—
“Matter 14.1(1) The following aspects of the Auditor General’s terms of appointment—
(a) the period of the appointment;
(b) salary, allowances and superannuation benefits;
(c) pensions and gratuities payable after a person has ceased to hold the office.
(2) The number of times a person may be appointed to the office of Auditor General.
(3) Restrictions on the other offices and positions which may be held by the person who is the Auditor General; activities of a person who has held the office of Auditor General (but no longer does).
(4) Provision requiring the Auditor General—
(a) to aim to do things efficiently and cost-effectively;
(b) to have regard, as the Auditor General thinks appropriate, to the standards and principles that an expert professional provider of accounting or auditing services would be expected to apply.
(5) The authorisation of persons to exercise functions of the Auditor General on the Auditor General’s behalf (including during a vacancy in the office).
(6) The oversight or supervision of the Auditor General or of the exercise of the Auditor General’s functions.
(7) The provision or use of resources for the purposes of the Auditor General’s functions including (in particular)—
(a) the employment and use of staff;
(b) the procurement and use of services;
(c) the holding of documents or information;
(8) The charging of fees or other amounts in relation to functions of—
(b) auditors appointed by the Auditor General under enactments.
(9) The restatement of any law relating to the Auditor General.”
(3) In Part 2, after paragraph 6, insert—
“6A (1) This paragraph applies to a provision of an Assembly Measure which—
(a) is a Matter 14.1 provision;
(b) provides for the enforcement of a Matter 14.1 provision or is otherwise appropriate for making a Matter 14.1 provision effective;
(c) is otherwise incidental to, or consequential on, a Matter 14.1 provision.
“Matter 14.1 provision” means a provision which relates to Matter 14.1 (and section 94(7) applies for the purposes of this definition as it applies for the purposes of section 94).
(2) The following provisions do not apply in relation to a provision to which this paragraph applies—
(a) paragraph 3 so far as it applies in relation to sections 145, 145A and 146A(1) of the Government of Wales Act 1998;
(3) Subject to sub-paragraph (4), a provision to which this paragraph applies cannot—
(a) modify or confer power by subordinate legislation to modify paragraph 3 of Schedule 8, or
(b) give or confer power by subordinate legislation to give any role to a committee of the Assembly.
(4) Sub-paragraph (3) does not limit any role which may be given to a committee of the Assembly which meets the requirements in sub-paragraph (5) (whether established by virtue of a provision to which this paragraph applies or otherwise).
(a) none of the following may be a member of the committee—
(i) the First Minister or any person designated to exercise functions of the First Minister;
(ii) a Welsh Minister appointed under section 48;
(iii) the Counsel General or any person designated to exercise the functions of the Counsel General;
(b) the committee must not be chaired by an Assembly member who is a member of a political group with an executive role.”.’— (Mr. David.)
Brought up, and read the First time.
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