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18 Mar 1996 : Column 1117

Audit (Miscellaneous Provisions) Bill

5.51 p.m.

Earl Ferrers: My Lords, I beg to move that the Bill be now read a second time.

Your Lordships will have perceived that the Bill has one great virtue. It has, in fact, many, but one is outstanding. It is short.

The Bill relates to the functions of the Audit Commission for England and Wales. Two of the provisions also relate to the functions of the Accounts Commission, which is the equivalent body in Scotland.

The Bill will give the Audit Commission powers to work with the Department of Health's Social Services Inspectorate on studying the performance of the social services departments of local authorities. This will apply just to England and to Wales.

It will change the financial years of the Audit Commission in England and Wales and the Accounts Commission in Scotland so that, instead of a financial year which runs from 1st April each year, the financial year will run from 1st November. This will coincide with what may be described as its operational year.

It will enable local authorities to publish annual information about their performance indicators in a free newspaper. This gives the local authorities an additional option. At the moment, they have to publish in newspapers which are sold and which circulate in their areas. This change will apply in England, Scotland and Wales.

There is also one technical provision in the Bill, and it is one which I fancy most of your Lordships will find agreeable. The Bill removes the need to have Treasury approval when the Secretary of State wishes to change the pay and conditions for Audit Commission members. This reflects the Government's policy on delegation of responsibility for pay and related matters.

The Audit Commission's main function is to arrange an external audit for all local authorities and health service bodies in England and Wales--a task which it carries out very well. It has established a reputation for professionalism and of independence.

The Audit Commission was set up in 1982 and, at the time, it was given a specific remit to carry out studies to promote value for money in the provision of local authority services. Much of the commission's work is of great interest to the Department of Health. The Department of Health at present carries out, through the Social Services Inspectorate, inspections of particular social services provided by a local authority which look in detail at the quality of service. But the inspectorate is not qualified to examine services from the point of view of value for money.

What the Department of Health wishes to see is for the inspectorate, jointly with the Audit Commission, to carry out a programme of studies of social services departments, which will look both at quality and at value for money. At present the legislation does not permit this.

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The Audit Commission also has no power at present to charge the Secretary of State for its work in this particular field. As the House will appreciate, if the Audit Commission cannot be paid for the work, the work is not readily done. The first provision in this Bill would, therefore, enable the Audit Commission to do this work and to be paid by the Secretary of State for it.

It is obviously of interest to local people and to local authorities to have an independent assessment of the performance of the whole of the social services department--both from the point of view of how it functions and how it manages its finance and other resources. We think that the best way in which to achieve this is to bring together the skills of the Audit Commission and the Department of Health's Social Services Inspectorate.

There will be a rolling programme of studies which will cover local authorities in England and Wales. Every local authority should be inspected once in five years. This programme will be supported with what is known as a review guide. This will guide both what is to be reviewed and how a review is to be conducted. A draft of the guide is currently being tested in four volunteer local authorities. The next version will be available shortly. Copies will be deposited in the Libraries of both Houses.

The second provision in the Bill--to change the financial years of the Audit Commission and the Accounts Commission--is about good management. Both these bodies organise their work programmes to run from November to October. That is because they have to audit the local authorities' and health services' accounts which end on 30th March. The bulk of audit work takes place, therefore, from April to November, and it would make sense if the financial year of the Audit Commission were made to coincide with their operational year. It will make it easier for them to budget, and to plan their work. The Audit Commission would make this change during 1997. The Accounts Commission would follow later, once it has dealt with the upheaval resulting from local government reorganisation in Scotland.

The third provision in the Bill relates to a major government initiative which was made under the Citizen's Charter; namely, the publication of local authority performance indicators. Performance indicators tell people the basic facts about their local authority's performance. Equally importantly, they encourage local authorities--both members and officers--to think about the standards which they are setting themselves, and about how they are meeting those standards.

The Audit Commission determines which performance indicators should be reported, and it oversees the way in which local authorities report them. It then draws all the local information together in the form of a national publication of performance indicators.

In fact, the commission is, this Thursday, publishing the second of those national publications, which will highlight the performance of local authorities against some 20 or so indicators. This national publication is an

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important part of our effort to try to increase the accountability and the effectiveness of local government. Public information must be readily available, and it has to be easy to understand if it is to be of any use.

If I might inject a personal observation, it is that I am almost paranoid about the need for simplicity of presentation--in anything. If the presentation is complicated or unattractively produced, it falls at the first fence; and nobody will be bothered to read it, however meritorious may be the contents.

Some local authorities have produced their indicators in a good and understandable way, and I congratulate them on that. We want to encourage this. We have therefore looked carefully at the comments of the Audit Commission and local government, which have told us that we should broaden the methods of publication which are available.

The Local Government Act 1992 requires publication of performance indicator information in a paid for newspaper which circulates in an authority's area. These provisions are no more than minimum requirements. The underlying principle is that the information should be available throughout the authority's area in a publication which is wholly independent of the authority.

We now believe, in the light of the representations we have received from the Audit Commission and from local government, that this principle can also be satisfied in certain cases by publishing the indicators in free newspapers which are delivered to houses in the locality.

Local authorities can use this option only where the free newspapers are wholly independent of the authority concerned, and where the free newspapers are distributed throughout the authority's area. It is immaterial, of course, whether the information is provided by one, or more than one, free newspaper in the area, provided that the criteria to which I have referred are observed.

The established way of publishing this material remains that of paying for it in local newspapers. Where the use of free newspapers would be consistent with the general principles which I have described, we would like that option to be available. In Clause 5, therefore, all we seek is a modest increase in flexibility as to how the minimum publication requirements can be fulfilled.

I like to think that none of the measures can be regarded in any way as controversial. They are really improvements in what is already sound management. I am sure that in all cases they will be welcomed by those who are most closely concerned. I hope that they will be equally welcomed by your Lordships. I beg to move.

Moved, That the Bill be now read a second time.--(Earl Ferrers.)

6 p.m.

Lord Dubs: My Lords, in giving the Bill a broad welcome, I reserve the right to make a few comments and ask a few questions of the Minister about the way in which he sees it operating. The Bill represents a step forward and is useful in that sense.

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I turn first to the level of co-operation that is to take place between the Government, the Social Services Inspectorate and the Audit Commission. I always believed that the Audit Commission's strength lay in it being a body totally independent of government and local government. I have some concern in that, by having to co-operate in the way suggested with the Social Services Inspectorate, which is not an independent body, there may be some difficulty in the Audit Commission retaining the impeccable independence from government that it has so far demonstrated. That concern underlies an important part of the Bill.

I understand that the Audit Commission can be involved at the request of the Secretary of State. I wonder whether it might be possible in certain circumstances for local council taxpayers also to call in the Audit Commission in their own right rather than relying on the Government to do it for them. I wonder too what might happen if, at some point in the future, the local authority were unhappy about the arrangements and indeed were not too keen on co-operating with the Audit Commission and the Social Services Inspectorate. But perhaps I am unduly suspicious about that. Certainly, I welcome the links between quality and value for money and the fact that once every five years there will be a rolling programme covering local government. My concern essentially is about the independence of the Audit Commission and how it can be maintained.

I note what the Minister said about changing the date of the financial year, which makes good sense. I was inclined first to be somewhat sceptical. We have now so many different dates for the financial year--1st April, 1st December and the calendar year used by Brussels--that they are becoming rather confusing. I suppose that in management terms, it makes good sense to change the date, so that it covers the relevant period when most of the audit work is done; namely, from 1st April onwards.

I have spent some time thinking about the effect of performance indicators in terms of local people having more information about their local authorities. I understand and welcome the feeling that paid-for newspapers should not be the only way for local authorities to make performance indicators available in their area. After all, quite often paid-for newspapers do not have the breadth of circulation achieved by free newspapers.

The Minister said that the free paper could be used, provided that it was totally independent of the local authority. I think I understand why he said that. On the other hand, some local authorities have a widespread distribution of their own newspaper, which gives local people information about the work of the local authority. I wonder whether it is absolutely true that local authorities' own papers would not be an adequate vehicle for publicising performance indicators and why that has to be left to a paper which is independent of the local authority. It may well be that in some areas there is not a free sheet which covers the area sufficiently well and therefore the council's own paper, where one exists, may well be appropriate. I put that point as a question because the Minister emphasised that the condition had to be in the Bill that any free sheet was totally independent of the local authority.

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In passing, let me hope that performance indicators can be set out in ways which are meaningful to people in local areas. Over the years, I have seen performance indicators that might be worthy for the experts but were somewhat mystifying to ordinary people because of the way in which they were presented or because of the need to summarise how the information was put over.

Over the years there have been a number of significant "scandals" in some local authorities. Clearly, we want to reach a situation whereby the Audit Commission can be helpful in assessing what local authorities can do in order to put back on the straight and narrow path those which have been beset by practices less than desirable. I do not want to list those local authorities which have been beset by such difficulties. I merely say that some of those difficulties continue. We all know about Westminster City Council. I hope that nothing in the arrangements in the Bill will in any way lessen the power of the Audit Commission to carry out the most thorough and widespread investigations where necessary into all aspects of local authority work.

Finally, one other issue tends to come out of any examination of how the Audit Commission and indeed the Social Services Inspectorate might operate. I have the privilege to serve on a Select Committee of this House which deals with relations between central and local government. It is far too early even to pre-judge the outcome of our report, but it has certainly been very informative in adding to my understanding of some of the issues. We do have a difficulty, and I am here putting forward my own views; they are not the views of the Select Committee, but they have come to me through my membership of that committee and the valuable evidence that it received from a wide range of local authorities and other bodies.

As a country, we have not fully decided whether we demand of local authorities that they achieve uniform standards of provision across the country in whatever service they provide, so that one local authority provides the same level of service as every other local authority; or whether in fact we welcome what we sometimes profess to welcome, namely, a healthy diversity in the way in which local authorities provide services. We have not resolved that difficulty. The thrust of the Bill suggests that we look to uniform levels of service across the country rather than wish to encourage diversity.

I appreciate that, if one local authority provides what I subjectively call a better quality of service than another, people in a less favoured local authority will complain that they do not receive as good a level of service in that area--services for children, for example, and so on. On the other hand, if we are to achieve the same level of service, we are simply using all the resources of central government to bring pressure to bear on local authorities to be uniform, thereby denying them the chance to be different from each other. I understand that in other European countries and in North America there is more diversity from one local authority to another.

I do not take a position as to what ought to be the case. I simply mention in my concluding remarks on the Bill that it seems to me that the underlying idea is that

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we are looking to uniform standards of service provision by local authorities, certainly in the area covered by the earlier part of the Bill as regards co-operation between the Audit Commission and the Social Services Inspectorate. Therefore, I ask the Minister the question: what is the philosophical basis for that approach?

6.10 p.m.

Baroness Thomas of Walliswood: My Lords, I am today's maid of all work on these Benches. I hope I may be found to give satisfaction. We generally welcome the Bill. Nevertheless, it raises certain concerns, which my honourable friend Mr. Rendel has expressed in another place on a number of occasions. I should say straightaway that we have no worries whatever in regard to the change of financial year for the Audit Commission.

First, we are concerned that, as a result of the Audit Commission's increased powers as laid out in the Bill, local authorities may be criticised for non-performance of their duties where that non-performance is the result more of insufficient funding than of any other cause. For example, there is an increasing consensus among professionals, carers and managers that some of the problems of occupation of hospital beds by social services clients and the catastrophic effect that that can have on bed availability within hospitals, is largely caused by lack of funding. I should perhaps declare that not only am I a member of a local authority, but also I am a member of a hospital trust board. I may therefore be said to have an interest on both sides of that argument.

Secondly, there is continuing anxiety within local government at the increasing burden of work imposed on local authority managers by continuous increases in the level and frequency of inspections. That is in direct contrast with the decrease in regulations supposed to be for the benefit of business. Of course, the funding of local government comes from a special source which requires special safeguarding. But the rights of the customer should be the same in both cases. The noble Earl referred to the guidance sent out to local authorities. That guidance is extremely dense and very long. I mention that as an example of the many pieces of paper to which everybody involved in local government has to respond these days on an almost daily basis.

Thirdly, there are anxieties in relation to where and by whom the local authority shall publish its performance indicators--the last section of the present Bill. I agree with the Minister that it is desirable that the public are informed in the clearest possible and most easily accessible terms as to the performance of their local authorities against the determined criteria. I am therefore a little concerned that there seems to be a good deal of limitation in relation to the enablement of local authorities to use free newspapers.

The Bill says that, if local authorities use free newspapers, they must,

    "take all reasonable steps to secure that a copy of a publication containing the information is distributed to each dwelling in their area".

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That is a good deal more demanding than the gloss which the Minister put on it in introducing the Bill. It would be difficult for local authorities, particularly in any but the most urban areas, to ensure that any newspaper, except possibly one produced by themselves, reached every dwelling. Along with the noble Lord, Lord Dubs, I shall be interested to hear the Minister's comments on that matter. I do not see how local authorities can be sure that any newspaper, free or paid for, is circulated to each dwelling in its area unless it is in control of the circulation process. That is another area of doubt.

The last matter I wish to mention--to some extent the noble Lord, Lord Dubs, dwelt on this also--is our concern that the main provisions of the Bill tend to extend the powers of central Government over local authorities and shift the balance of scrutiny away from local people. That matter was referred to in another place at some length and I shall not go into all the arguments. However, our view is that the best way of increasing the accountability of local authorities is to enable local people to express their views through the ballot box by a fair and proportionate voting system.

The noble Lord, Lord Dubs, referred to anxieties about poorly administered authorities, but he did not indicate whether the amendments tabled in another place were to be brought here. We shall see when the time comes. No doubt, whatever amendments are tabled, there will be some co-operation and we shall see whether or not we are able to support any of them.

6.15 p.m.

Earl Ferrers: My Lords, I am grateful to the noble Lord, Lord Dubs, and to the noble Baroness, Lady Thomas of Walliswood. The noble Lord, Lord Dubs, approved the principle of the Bill but had one or two anxieties, particularly in relation to the Audit Commission and whether it will remain wholly independent. It will remain independent; after all, it is an independent organisation. The Social Services Inspectorate may not be independent of central Government. The studies will be done by organisations which are independent of local authorities, not central Government. The task needs the expertise of both the Audit Commission and the Social Services Inspectorate. That inspectorate is part of the Department of Health and wholly independent of local authorities. From the point of view of inspection therefore the noble Lord, Lord Dubs, need not worry too much; they are totally independent.

The noble Lord was concerned also about whether the Audit Commission could refuse to work if it so wished. It could so refuse if it so wished. He was concerned also with what would happen if the local authority did not want to co-operate. In that case the local authority would be refusing to co-operate with both the Audit Commission and the Secretary of State and that refusal could be challenged in the courts by way of judicial review whereby an order of mandamus would be issued which would require the local authority to comply or to co-operate. The scenario proposed by the noble Lord, Lord Dubs, would be a fairly radical and unusual one. I hope that most local authorities will be prepared to

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co-operate; after all, they are providing the services and it is only right that they should report on them and be inspected as Parliament wishes.

The noble Lord, Lord Dubs, said that the Audit Commission could be asked by the Secretary of State to investigate a matter; can council tax payers do that? The short answer is that council tax payers do not have the same prerogative as the Secretary of State. However, the studies will include meeting local people.

The noble Lord was concerned also, as was the noble Baroness, Lady Thomas, about the performance indicators and the publishing of them in newspapers. There is nothing to prevent a local authority from publishing its performance indicators in its in-house publication, to which the noble Lord, Lord Dubs, referred. However, it must satisfy the statutory requirement to publish in a paid-for newspaper or, if the Bill is passed, in a free newspaper as well. The reasons are fairly obvious. An in-house newspaper is not independent, whereas a paid newspaper or a free one is.

The noble Baroness, Lady Thomas, was concerned about the distribution having to be to every dwelling. It is important to get the principle right. Local authorities must disseminate their information more widely than simply through paid-for newspapers. Without the requirement in the Bill, free newspapers may go, for example, to only 60 per cent. of the population, which would leave 40 per cent. without anything. The publication requirements in the Bill are the minimum requirements necessary. I am sure that the noble Baroness will understand that. It is possible for free newspapers of any kind to be pushed through doors, but if they are not pushed through virtually every door, the criteria will not be met.

The noble Baroness touched a tender nerve with me when she said that the guidance is large and dense. I am always complaining about the density of publications and am always told that everyone has to know all the details. I then say, "Yes, but some poor blighter will have to read it all". The noble Baroness will be glad to know that the next version will be shorter and much easier for the layman to read. I do not know whether it is the noble Baroness's influence in advance which has secured that or whether it has been mine in retrospect. I rather fancy that it is the noble Baroness's influence in advance.

I am grateful for your Lordships' observations on the Bill. I hope that it will prove to be uncontroversial. The noble Baroness, Lady Thomas, was worried that the Bill might be a little controversial. After what I have said I hope she will find that it is not quite as controversial as she thought.

The noble Baroness referred to the lack of availability of hospital beds and said that it was due to lack of funding. With the greatest of respect, I do not think that would be a natural part of this kind of inspection. What the hospitals have to do is show what money they have, what they have done with it and how they have done it. If it turns out that they have done the best they can with the facilities that they have, that will be reported.

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

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