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Lord Davies of Oldham: Forgive me if I have moved on in error. The noble Baroness is quite right. The groupings changed not long before the Committee began, which has caused a little difficulty on this side, particularly as I am less familiar with the Bill than I would like to be.

Amendment No. 11 would delete the reference to construing Clause 4 as one with other education legislation. The provision is essentially one of clarification and is common to education legislation. It enables definitions in other education legislation to be relied on to clarify meaning. For instance, were there to be uncertainty about whether an educational establishment was an HE institution for the purpose of a 3Es study under Clause 4, the definition of such an institution set out in the Further and Higher Education Act 1992 and the way in which the courts have interpreted it would be relied on for clarification.

We recognise the need for clarification. I seek to commend to the Committee the reasons why it is important that the bodies are subject to a different auditing regime from that that would be introduced by the amendment. On that basis, I hope that the noble Baroness will feel able to withdraw it.

Baroness Noakes: Before I do so, I want to follow up on one or two points. I think that the Minister said that educational institutions already fell within Section 145 of the Government of Wales Act and Schedule 17. I have read the legislation very briefly but could not see that. Educational bodies did not seem to be covered, so the clause seems to create the ability to do value-for-money work within educational bodies.

Lord Davies of Oldham: I hope that I presented the position accurately—that the law is contained within the higher education Act for Wales. I think that I have given the correct definition of where HE institutions are located.

Baroness Noakes: I will then of course read carefully in Hansard what the Minister said, as I clearly misunderstood when I listened to him.

My second question goes back to ELWa, which the Minister said was already audited by the Auditor General, so that was all right. Why then is ELWa covered in proposed new Section 145B(1)? Why are we specifically referring to ELWa, and not simply its ability to ask for value-for-money studies of other institutions? It is specifically covered in both the "Subject of study" and the "Requesting body" columns of that proposed new section. If it is already within the ambit, why is it covered again? Is there any option for ELWa as to whether it has "value for money" studies or not?

Lord Davies of Oldham: The answer to the question is no. Proposed new Section 145B is almost identical to Section 36 of the Audit Commission Act 1998. It

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simply attempts to transfer the functions in relation to Welsh education bodies to the Auditor General for Wales.

Baroness Noakes: In that case, ELWa is not within the requirement to have a value-for-money study unless it requests a value-for-money study. Is that correct?

Lord Davies of Oldham: The situation, as ever, is more complex than I would have wished. For backward-looking studies, we are talking about the Government of Wales Act. For forward-looking studies, we are talking about the Act to which I referred.

Baroness Noakes: Again, I can see that I shall have to read the Minister's words with care and, if necessary, come back to him after the Grand Committee is completed.

I thank the noble Lord, Lord Livsey, for his contribution to the debate. He talked about the disadvantages of funding for educational bodies in Wales, on which I have no briefing. If funds were particularly scarce, it would seem even more important that those bodies used the money with the utmost economy, efficiency and effectiveness, and therefore a case should be made that they should be within the Auditor General's remit and not outside it.

I thank the Minister in particular for his explanation of subsection (7), which will doubtless make complete sense on rereading. I am sorry that he was confused by late changes to amendments. We gave notification about those changes before 9.30 this morning; if it took a long time to reach him, that is nothing to do with us.

Lord Davies of Oldham: I assume that to be the case. I was not in any way, shape or form being accusatory, merely apologetic.

Baroness Noakes: On that note, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No. 8 not moved.]

Baroness Noakes moved Amendment No. 9:

    Page 6, line 9, at end insert—

"( ) be appointed to audit their accounts;"

The noble Baroness said: I shall also speak to Amendment No. 10. Both the amendments concern Clause 4, which purports, according to its title, to deal with studies at the request of educational bodies, but in practice goes wider and deals with audits of those bodies. My amendments deal with the audit part of the clause.

Proposed new Section 145B(5) deals with audits of higher and further education corporations. The Auditor General can advise the corporations on the appointment of auditors or arrange for a member of his staff to be appointed auditor, but the Auditor General himself cannot be appointed auditor. Amendment No. 9 seeks to rectify that omission. I am

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sure that a higher or further education authority would much prefer to have the Auditor General's own name appearing on the audit report, rather than some much more anonymous, although doubtless worthy, member of his staff. I hope that the Government share that view.

As I mentioned, proposed new subsection (5) allows the Auditor General to arrange for a member of his staff to be appointed auditor to a higher or further education establishment. Amendment No. 10 merely ensures that the member of staff is properly qualified by linking the qualification to that in Clause 14, under which the Auditor General's staff may be appointed to the audit of a local government body in Wales. I hope that that amendment is non-contentious and that the Minister will be prepared to accept it. I beg to move.

Lord Davies of Oldham: Amendment No. 9 would have the effect of enabling the Auditor General to be appointed as the statutory auditor of an education corporation on a permanent basis. The intention of Clause 5 is to add a proposed new section to the Government of Wales Act. It would enable the Auditor General, at the request of a higher or further education corporation, to advise it in connection with the appointment of persons to audit its accounts, and to arrange for its accounts for a financial year to be audited by one or more members of his staff, appointed by the corporation. Those functions are currently undertaken in respect of England and Wales by the Audit Commission under the Audit Commission Act.

On publication of the draft Bill for consultation in April 2003, the Assembly undertook that if at some point in future it were to propose to incorporate further or higher education corporations as a category within the Auditor General's remit, such a proposal would be subject to a separate consultation exercise. It would therefore be preferable to deal with such bodies as a class rather than on a piecemeal basis. Any future exercise could take account of arrangements for both financial audit and value for money audit through economy, efficiency and effectiveness studies. Nothing in the terms of Clause 4(5) prevents the Auditor General and an education body from renewing an audit arrangement for a further financial year.

The problem with the amendment is that it would create a piecemeal approach to the financial audit of higher and further education corporations, and would run counter to the National Assembly's commitment to consult on any future proposed changes to the audit arrangement for such bodies. Clause 63, in conjunction with Section 144 of the Government of Wales Act, would enable further and higher education institutions to be added to the Auditor General's remit at some future time.

As for Amendment No. 10, we have not sought to affect the way in which the Auditor General appoints his own staff or chooses to use them. The amendment would restrict his ability fully to deal with his own staff in that context.

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We have debated the question, which we recognised was important, of the accountability of HE and further education institutions. It is clear that the Assembly proposes to consider the issue further with regard to the appropriate audit arrangements. However, as it has made the commitment to further consultation on the issue—we all recognise that it is interesting and has implications for significant institutions—we want to preserve the Bill as it stands. I ask the noble Baroness to withdraw her amendment.

5.15 p.m.

Baroness Noakes: I thank the Minister for enlightening the Committee on the plans that the Assembly may have and on which it may consult, and the legislative provisions available should the Assembly decide to extend to further institutions. That is fine, but I do not think that my amendments had anything to do with that. They merely gave a further option to those higher education bodies that chose to become involved with the Auditor General. It is a pity that such an option is not available to them.

Amendment No. 10 would have ensured that, if an auditor were appointed, he would be qualified. The Auditor General is restricted in whom he can appoint to audit a local authority under Clause 14, but what is good for local authorities is apparently not good for higher education authorities. I am sure that the Auditor General would not want to appoint anyone who was not properly qualified to either a higher education corporation or a local authority. It is curious that the Bill has different standards. The Minister has justified them under freedom, but that must be an illusory justification because it does not apply elsewhere in the Bill to local authority audit.

We will return to the fact that the Bill is not a coherent whole. It is a patchwork of different provisions culled from here, there and everywhere. That results in different regimes applying to different sectors of body subject to audit under public audit arrangements in Wales. That is unsatisfactory and a missed opportunity. We would not want to die in a ditch on those points, but they underline the fact that the Bill is not one of which to be proud. It does not set a new future for public audit in Wales, but picks bits here and there and puts them together in a way that is not wholly coherent. That said, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No. 10 not moved.]

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