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Baroness Farrington of Ribbleton: As the noble Lord, Lord Dixon-Smith, said, this amendment is intended to alter the arrangements for proper financial administration for the GLA and the four functional bodies. It would provide for the GLA's chief finance officer to be responsible for overseeing the financial administration of the four functional bodies. Put simply, the functional bodies' chief finance officers would be in the position of reporting to the GLA's chief finance officer. In the event of a disagreement, her or his advice would take precedence over theirs. Such an arrangement

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would be a recipe for confusion and blurred accountability and we cannot agree to it. Perhaps it would help if I were to explain the arrangements for financial administration for which the Bill provides.

The mayor, subject to the assembly's role, will be responsible for setting the budgets of each of the four functional bodies, but will not be accountable for the management of their financial affairs. That responsibility will rest with the bodies and authorities. For that reason, it is essential that the functional bodies, and the GLA itself, each have their own chief finance officer.

In financial management terms, once their budgets have been set, each of the functional bodies will operate independently. Each will be required to make arrangements for the proper administration of its financial affairs, and to appoint a suitably qualified person to oversee those affairs; namely, the chief finance officer. Each of those officers will stand in their own right within the body concerned, carrying out the full functions of their post--in accordance with the provisions of the Local Government Finance Act 1988--and reporting as necessary to the relevant board or authority. The GLA's chief finance officer will report to the mayor.

Each board and authority will be responsible for ensuring probity and regularity in the financial management of its own functional body. Each will be expected to have regard to any reports and recommendations made by its chief finance officer and to ensure action is taken where necessary. Those arrangements will provide a clear line of responsibility from each of those chief finance officers to their relevant boards. As each functional body is responsible for its own financial affairs, it would not be appropriate for the GLA's chief finance officer to have a role in the functional bodies' finances. That would blur accountability by depriving each board and authority of a single source of specialist financial advice and appropriate financial oversight.

To reflect the mayor's interest, we have provided that where a chief finance officer makes a report concerning a functional body, he is required to provide a copy for each member of the relevant body, the mayor and the Chair of the assembly. Responsibility for dealing with the report will rest with the board or authority concerned and it cannot transfer that responsibility to the mayor.

The Bill provides for clear arrangements for financial administration. Unfortunately, the noble Lord's amendment would lead to confusion and blurred accountability. I urge him to withdraw it.

Lord Dixon-Smith: Once again the noble Baroness has eloquently produced arguments to sustain the Government's proposals. She said that the mayor would not be responsible for the activities of the functional bodies in detail. The problem is that the mayor will be responsible for the policies that those bodies are obliged to follow and for the budget that they will have to follow. If the mayor has those responsibilities, I hope that he never disagrees with something that a functional body might do. If he does, under the arrangements in the Bill he will have no authority to do anything because the functional bodies will be free to act independently when the financial year has started.

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The noble Baroness may think that my amendment would lead to a certain amount of confusion but, in practice, the procedures that the Minister enunciated would be equally likely, if there is any divergence of view, to lead to confusion. I will consider carefully the Minister's response but we may return to this matter. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 112 agreed to.

Clauses 113 and 114 agreed to.

Clauses 115 (Functions of chief finance officer as regards reports):

Lord Dixon-Smith moved Amendment 240:

Page 63, line 29, leave out from first ("the") to end of line 33 and insert ("Chairman of Transport for London or, in his absence, the Deputy Chairman of Transport for London"")

The noble Lord said: The purpose of this small amendment is to ensure that where reports are being considered, the finance officer is obliged to consult the chairman or, in his absence, the deputy chairman of the functional body, rather than

    "the person who is to be consulted under subsection (3A) above"-- which means that consultation could be dealt with by somebody with rather less authority.

The purpose of the amendment is simply to ensure that where reports under this clause are brought forward they are dealt with at the highest possible level in the functional body. I believe that that would be a proper way of handling the situation. I should add that it seems to me that the amendment has some relevance to the London Development Agency, which was referred to in the previous amendment, but we seem to have missed that one in our trawling through the Bill. No doubt the noble Baroness will be relieved that that is the case. I beg to move.

Baroness Farrington of Ribbleton: The chief finance officer of a relevant authority has a duty to ensure that where the authority has incurred, or might be about to incur, unlawful expenditure, he or she should complete a report and present it to the full authority. Before completing the report, the chief finance officer is, so far as it is practicable to do so, required to consult with the head of paid service and the monitoring officer. This requirement on the chief finance officer to consult with other officers of the authority seeks to ensure that there is agreement among the officers of the authority about the legality of the course of action being taken and that all the relevant facts are clear.

Once a report has been completed and passed to an authority, it must be considered at a meeting of the authority within 21 days of the receipt of such a report. The authority must then consider whether it agrees or disagrees with the report. The auditor must be notified of the meeting and, as soon as possible afterwards, informed of the outcome.

The Board of Transport for London will include executive members. The structure of the body may not follow that adopted generally by local government, and it may not choose to appoint a chief executive. However, it

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is important that it has members or officers specifically designated to fill those posts which have a responsibility for ensuring probity in the running of the body. Provision has been made for the appointment of a member or officer as the chief finance officer, and that officer must be a member of a recognised professional accountancy body. The chief finance officer will carry the full responsibilities attaching to this post in accordance with the provisions of the Local Government Finance Act 1988, including the completion of reports to the body.

While it may not be appropriate for Transport for London to appoint a chief executive or monitoring officer in the same way as a local authority, we nevertheless believe that it should appoint a person, either a member of the board or an officer, to fulfil the role of head of paid service and monitoring officer and with whom the chief finance officer can consult before finalising a report. Accordingly, we have provided that TfL should designate someone to fulfil this role.

Where the chief finance officer does complete a report about the actions of Transport for London, the body must consider it at a full meeting of the board. To require the chairman, and only the chairman (or his deputy), to be consulted before the report is finalised would limit the discretion of TfL to appoint whom it thinks fit to fulfil the consultation role and appointments may change from time to time or from case to case.

I agree that the chairman, or, in his absence, the deputy chairman, will need to be fully informed and be required to consider any report presented by whoever fills the role of the chief finance officer. This need not necessarily be during the preparation of the report. The chairman will accordingly be fully informed in the consideration of the report.

The arrangements that we are proposing will ensure that matters are considered properly and promptly by those with the necessary responsibility for taking action. I do not think that we should seek to limit the discretion of Transport for London to appoint whom it considers is most suitable to undertake these consultation roles. I have answered this amendment in some detail because I am confident that, on reflection, the noble Lord will feel that he may not need to return to the issue.

11 p.m.

Lord Dixon-Smith: I am confident that at this hour of the night I cannot match the eloquence of the noble Baroness's reply and I do not intend to do so. However, I shall study what she has said with great care and then consider what I wish to do about the matter. In the meantime I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord Dixon-Smith moved Amendment No. 241:

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