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Lord McIntosh of Haringey: My Lords, the simple answer is "Yes" but I had better repeat what I said a few minutes ago to ensure that I do not in any way depart from a script. I am sure that the noble Lord, Lord Shaw, will understand that point.

It is wrong to imply that, if the C&AG does not audit certain non-departmental public bodies, Parliament does not have any oversight of those bodies. Ministers are accountable to Parliament for all such bodies and the accounts of all these bodies are laid before Parliament regardless of who carries out the audit. It is not even true that the C&AG has no oversight of NDPBs which he does not audit. He has inspection rights--I think that is the point that the noble Lord, Lord Shaw, made--at all executive NDPBs. He is able to investigate matters of concern even where he is not the appointed auditor--and, as I said, he has done so in practice on many occasions.

The differences between us in regard to this amendment are very considerably practical. First, the noble Lord, Lord Higgins, wants the Bill to refer to, and to define, "non-departmental public bodies". He has taken the point that his previous term, "public service agencies", was too vague and is bravely trying to define these bodies on the face of the Bill. But his definition would still be as problematic as the term "public service agencies" because there are simply too many potential variations in non-departmental public bodies to capture in a single, legally sound definition. It is for good reason that there has never been an attempt by any government to define "non-departmental public bodies" in statute.

The third characteristic of the definition that the noble Lord proposes--that the body has an accounting officer designated by a government department--would mean that the Government could thwart the intention by not appointing an accounting officer. There is also a recipe for confusion in the combination of, on the one hand, an imperfect definition of these bodies and, on the other, the fact that the amendment automatically makes the C&AG the auditor of the bodies within the definition. Legal challenges could arise from those who think that a body which is not included should be included, or from those who think that a body which is included should not be included.

One has to compare these difficulties with the practical approach that we have taken in Clause 23(7)(a). With our approach, the Treasury is given the power to designate bodies to be audited by the C&AG on a case by case basis. It has to have regard to one of two conditions stipulated in the Bill: that the bodies must be exercising functions of a public nature; or must be,

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Most important from Parliament's point of view is the fact that the Treasury must consult the C&AG before making any designation. Surely that is a more practical approach and more equitable between Parliament and the executive.

Of course, if Sharman was to recommend that there should be a widespread take-over of audit by the C&AG--and he may do that--it can be done in an orderly way without having to be done all at once. My charge of nationalisation was teasing, but there is an element of reality behind it.

My final point is that the amendment would make the Treasury and not the sponsoring department responsible for laying the accounts of those bodies before Parliament. That is odd because it would dilute the accountability of the sponsoring department for these bodies--which is the opposite of what I think is right.

Perhaps I may recap on what the Government have provided for in the Bill. Subsections (6) and (7) of Clause 23 give the Treasury an order-making power to enable the C&AG to be appointed the auditor of those NDPBs which he does not audit at present, including those which he is currently barred in statute from auditing--apart, that is, from NDPBs established as companies. Any designation to this effect by the Treasury will need to be approved by affirmative resolution of both Houses of Parliament. In addition, the Treasury is required to consult the C&AG before proposing a designation to Parliament. The Government's order-making provision takes full account of the interests of both Parliament and department. It has the advantage of not pre-empting the outcome of the Sharman review, which is expected towards the end of this year.

I am sorry, but despite the blandishments of the noble Lord, Lord Higgins, I cannot accept the amendment.

5.15 p.m.

Lord Higgins: My Lords, we can agree on one point: that is, that the Chief Secretary's description of the present situation as a "hotchpotch" is probably more accurate than my description of it as a "mess". The reality of the situation is that the present bodies which are not audited by the Comptroller and Auditor General are an odd assortment.

Having said that, my personal feeling is that the argument about Sharman is something of a red herring. I do not think that one needs a deep study to take the argument that, by and large, one size should fit all. In that context, I think that the point made by my noble friend Lord Shaw is important. One needs to consider whether there is a distinction between Ministers reporting to Parliament when an audit has been carried out by an outside body, and Ministers reporting to Parliament in the context of the direct approach of the National Audit Office to the Public Accounts Committee.

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I wish to consider very carefully what the Minister said. I feel that there is still a strong argument for taking a view on this matter in the Bill rather than waiting for Sharman--even if, as the noble Baroness suggested in her contribution from the Liberal Democrat Benches, the Sharman report may eventually gather dust. There is a case for clarifying the situation and we shall come back to it at Third Reading. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord Higgins moved Amendment No. 11:

    After Clause 7, insert the following new clause--


(" .--(1) This section applies to any government department which is required to prepare resource accounts under section 5.
(2) A department to which this section applies in any financial year shall prepare a performance statement in respect of that year analysing the performance of the department in using the resources to which the accounts relate in achieving its objectives for that financial year.
(3) A department shall send its performance statement to the Comptroller and Auditor General with the resource accounts sent to him under section 5, or at such other time as the Comptroller and Auditor General may specify in respect of that statement.
(4) The Comptroller and Auditor General may examine any performance statement which he receives from a department under subsection (2) and may report on it to the House of Commons.
(5) Subsection (4) shall not entitle the Comptroller and Auditor General to question the merits of the policy objectives of a department to which the performance statement relates.").

The noble Lord said: Amendment No. 11 is concerned with the issue of performance statements. This is a point which has been very close to my heart over a number of years, given my previous role as chairman of the Liaison Committee, which has the task of co-ordinating the work of select committees, and also as chairman of the Treasury Committee. It has been a very long battle indeed to try to improve the performance statements which are available to Parliament, and in particular to ensure that those statements are valid. This amendment seeks to ensure that performance statements are made and are valid.

The present Public Accounts Committee and its predecessors going back to the time when the system was revised at the initiative of Mr Norman St John-Stevas (as he then was) have long held the view that performance reporting should be on a statutory basis and independently validated by the National Audit Office, in particular under the auspices of the Comptroller and Auditor General.

In discussing this matter in Grand Committee the Government stated that they were already committed to reporting annually to Parliament and the public on out-turn against targets. The reality is, however, that those statements are not audited, and it raises questions about the reliability of such unaudited accounts. Indeed, I gather that the Chief Secretary has agreed with the PAC that performance measures should be legitimate, credible and objective. For those principles to be achieved, a degree of independent validation is important. In various committee reports we have seen doubt cast on the validity or relevance of

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particular figures. That is of course true so far as concerns some of the performance figures of the National Health Service in particular.

The Government argue that this is either unnecessary or premature. That does not appear to be the case. Under the 1983 Act--with which I was much involved--the National Audit Office gave the C&AG statutory powers to undertake value-for-money studies, and these have been developed alongside performance indicators. But it seems to me that the situation needs to be carried forward and that we have an opportunity to do so in this Bill.

It is of course the case that similar statutory performance measures are appropriate elsewhere, particularly in the field of local government. It is not clear why they should be appropriate for local government but not for national government.

At an earlier stage the Minister argued that the new statistics commission would provide independent assurance on performance data and that to involve the C&AG would lead to duplication. I do not believe that that is so. The statistics commission and the C&AG play different roles. As I understand it, the statistics commission is concerned with the integrity of issues relating to national statistics, which is a very different thing from individual departmental statements.

Perhaps the Minister can confirm that the statistics commission will not be concerned with performance measures in individual departmental reports which are then normally examined by the departmentally related Select Committees. The amendment would move the matter forward. It would alleviate pressures which have been building up over many years. The amendment would ensure that the accounts take into consideration not only inputs, which are what most government accounts tend to deal with, but also the extent to which they achieve their outputs. That is very important. I hope that the Minister can accept the amendment. I beg to move.

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