Local Audit (Appointing Person) (Amendment) Regulations 2021

Lord Kennedy of Southwark Excerpts

Tuesday 23rd November 2021 Grand Committee

[Baroness Pinnock (LD)]

My Lords, I draw attention to my relevant interests as a vice-president of the Local Government Association, a member of Kirklees Council and a member of that council’s audit and governance committee.

The Redmond review into local authority financial reporting and audit is far-reaching in its recommendations and broadly welcomed by those in local government, who want greater simplicity and transparency in financial reporting and auditing. One challenge facing local government audit requirements is the narrowing number of private audit firms willing to take on such audits. Yet sound auditing is an essential prerequisite for value-for-money judgments and financial transparency, as local government financing becomes ever more complex.

The proposals in this SI tackle some of the issues regarding process. These relate to fee scales, deadlines, standard fee variations and the length of time for which an auditor is appointed. Setting the end of November as the deadline for setting fee scales so that up-to-date information can be included in the calculation seems sensible, as does setting standardised fee variations. However, can the Minister confirm that such fee variations will be in proportion to the local authority accounts being audited?

I have some concerns about the potential for an auditor to be appointed for as long a period as five years. As external auditors rely heavily on a good working relationship with the local authority finance team and its internal auditors, there is always a risk that a cosy relationship develops. Can the Minister explain the thinking behind the ability for the same auditor, rather than the same audit company, to continue for five years? An explanation of the criteria that will be used by the appointing person to appoint for shorter periods “where desirable” would be helpful, as would an outline of the circumstances for audit firm rotation partway through an audit period, to understand the thinking behind that. If the Minister does not have all that in front of him, it would be good if he could write me a note.

There is a far deeper concern with local authority audits than will be dealt with by this SI. The Financial Reporting Council, which regulates the accounting industry, said this year that 60% of the English local authority audits it had reviewed did not meet its required standards. The House of Commons Public Accounts Committee detailed the problems this July. I will quote from the summary of its report, as we need to think about it:

“Without urgent action from government, the audit system for local authorities in England may soon reach breaking point. With approximately £100 billion of local government spending requiring audit each year”,


the Ministry of whatever it is called now—levelling-down, communities and whatever—

“has become increasingly complacent in its oversight of a local audit market now entirely reliant upon only eight firms, two of which are responsible for up to 70% of local authority audits. This has not been helped by the growing complexity of local authority accounts … If local authorities are to effectively recover from the pandemic, it is critical that citizens have the necessary assurances that their finances are in order and being managed in the correct manner.”

Both the FRC and the Public Accounts Committee report raise fundamental issues about local authority auditing which are not addressed by this SI, but which I hope the Minister can respond to either now or in writing. Having said that, with the exception of the questions I raised earlier, I concur with the changes that have been proposed.

[Lord Kennedy of Southwark (Lab Co-op)]

My Lords, I, too, declare my interest to the Grand Committee as a vice-president of the Local Government Association.

Audit is about ensuring the proper inspection of a body’s financial affairs, ensuring that the financial dealings of the organisation, and the information that residents get, is correct and proper. It gives confidence to local people and, of course, to the Government and everybody else that an organisation is acting properly—or it identifies irregularities.

I was first elected a councillor in 1986—I am showing my age now. I remember the old district auditor, who used to look after the accounts. Of course, that is now all gone; we have local audits run through the Local Government Association.

The noble Baroness, Lady Pinnock, raised an important point on fee scales, what those fees are, when they can be varied and changed, and why. There is also the risk around the relationship: if the same person does the work every year, there may be an issue with things becoming too cosy. For me, there is the whole question of value for money. This is council tax payers’ money that we are spending here—so what are we doing to ensure that, when any fees are varied, we are getting value for money? The noble Baroness made the point that fewer and fewer firms are willing and able to do this work, which is also an issue for the Government to look at.

For me, it is about ensuring that public money is spent wisely, properly and legally. If fees are going to be varied, how do we ensure value for money? Then there is the issue of the reduced number of firms doing this work. How do we ensure that the relationship is not too cosy and is always properly professional? Having said that, I have no issue with the regulations, and I shall leave it there. I hope that the Minister can respond to the issues raised. I know that, if he cannot, he will come back to noble Lords with a letter and place it in the Library of the House.

Conformity Assessment (Mutual Recognition Agreements) (Construction Products) (Amendment) Regulations 2021

Lord Kennedy of Southwark Excerpts

Tuesday 23rd November 2021 Grand Committee

[A noble Lord]

I only went to a technical school.

[Lord Kennedy of Southwark (Lab Co-op)]

My Lords, it is good to be back in the Moses Room with the Minister. As other Members have said, the regulations before us are technical. I can say at the outset that I am happy to support them.

My noble friend Lord Jones asked about consultation. I am sure that the Minister, the noble Lord, Lord Greenhalgh, will come back on that point, particularly in regard to consultation with the devolved Administrations. My noble friend mentioned the Senedd, but it would be interesting to hear what consultations have taken place with the other Administrations. I also noted from the Dispatch Box that there was no consultation with the public because it was not deemed necessary.

The noble Baroness, Lady Pinnock, raised an important issue in respect of Regulation 6. It is absolutely fine to agree the regulations as they are here now; there is no problem with them whatever. But the question is always, is it not, what happens when things go wrong. I think that was the noble Baroness’s point. It is a fair point. We are authorising a body in another country to certify that products are correct and stuff, but further down the track, if things go wrong, what processes are there? How do we deal with that? This is the nub of the question that the noble Baroness and I want answered.

I will leave it there. I accept that, if the Minister does not have an answer now, he will write to colleagues and place a copy in the Library. As I said, I am content with the regulations as they stand.

[Lord Greenhalgh (Con)]

My Lords, I particularly appreciated the contribution from the noble Lord, Lord Jones, who I gather has had more than half a century of parliamentary service. That is quite incredible; I am almost the same age as the number of years he has served in both Houses. The noble Lord is obviously very passionate about Wales. He wanted to know about the consultation. No public consultation was carried out, because it was not considered necessary.

I understand a bit about the principles of this. It is all about opening up markets. We know that there is a shortage of construction products; that was the nature of the question from the noble Baroness, Lady Pinnock, and the noble Lord, Lord Kennedy. Although it is good in principle, how do we ensure in practice that the construction products that are recognised by a conformity assessment body that is not our own do not result in any dumbing down in standards? Obviously, as the Minister for Building Safety, that has been the key question on which I have wanted reassurance. We are absolutely committed to maintaining high standards for construction products. We know what we saw in the tragedy of Grenfell; indeed, I referenced Lakanal House in Southwark and Garnock Court in 1999. Every decade, we have had a tragedy.

I assure noble Lords that this legislation does not amend the standard of construction products being placed on the market. That is the critical thing for everybody to recognise. However, there is a shortage of construction materials, so we will get high-quality products, increase availability and encourage the flow between the UK and Canada. That can only be a good thing, but I take the point. I hope that I have given sufficient reassurance and answered the specific point on consultation.

If there is anything else, I will be happy to pick it up and write to noble Lords, for example on some of the technical points.

Leaseholders: Costs

Lord Kennedy of Southwark Excerpts

Thursday 18th November 2021 Lords Chamber

Tabled by

[Lord Kennedy of Southwark]

To ask Her Majesty’s Government what steps they are taking to ensure that leaseholders and others do not bear the costs of repairing building safety defects for which they are not responsible.

Islamophobia

Lord Kennedy of Southwark Excerpts

Monday 15th November 2021 Lords Chamber

[Lord Greenhalgh (Con)]

My Lords, as someone who has spent time with and engaged with Qari Asim—I met him in my previous role as Faith Minister—I recognise that he has much to contribute and I am sure we will continue to make best use of his undoubted reputation and track record.

[Lord Kennedy of Southwark (Lab Co-op)]

My Lords, Islamophobia is a real problem in the UK. Prejudice against Islam must be taken very seriously. The Government are certainly proceeding very slowly—there is no question about that—as highlighted by the noble Lord, Lord Sheikh. Can the Minister confirm that it is the Government’s intention to adopt a definition, or are they not planning to do so? It is very easy, either way.

Council Tax: Second Homes

Lord Kennedy of Southwark Excerpts

Thursday 4th November 2021 Lords Chamber

[Lord Greenhalgh (Con)]

My Lords, there are a number of schemes. I have mentioned the £11.5 billion affordable homes programme; there is also the first homes scheme, which has a minimum discount of 30% but which, with local councils, can be increased to 40% or 50%, so that new homes are offered first to people who live locally. Those kinds of initiatives will help local people get on the housing ladder, which is what the vast majority of people want.

[Lord Kennedy of Southwark (Lab Co-op)]

My Lords, I refer the House to my entries in the register. Holiday lets, as we know, can be much more lucrative than tenancies, with landlords frequently able to bring in the income they would get over the course of a whole year from tenants in just the summer months. Small business rate relief also means that they can pay very little tax. Should the Government not do more in this area, perhaps with a larger levy, to encourage landlords to rent to tenants instead and help deal with the housing crisis that we spend so much time talking about in this House?

[Lord Greenhalgh (Con)]

My Lords, we are approaching this by ensuring that people do not game the system. It is perfectly proper, if you have a business, to be subject to the business rates regime. We have not yet finalised what that threshold will be. We are also consulting on whether there is a need for registration of these homes, as I have mentioned.

Gypsies and Travellers

Lord Kennedy of Southwark Excerpts

Thursday 4th November 2021 Lords Chamber

[Lord Greenhalgh (Con)]

My Lords, I can provide only the statistics that I have been given, which are that since 2010 there has been an increase of 1,291 new affordable permanent pitches, and in the January 2020 Traveller caravan count there were 354 transit pitches, of which 138 were vacant transit pitches. We recognise the need to increase supply, which is why we are providing the affordable homes grant that local authorities can bid into. I also point out that there is a very high bar for criminality—members of the community committing actual harm—before criminal proceedings begin.

[Lord Kennedy of Southwark (Lab Co-op)]

My Lords, I refer the House to my interests as set out in the register. Does the noble Lord accept that the lack of places for Gypsy, Traveller and Roma communities is a huge problem? This is a community that is expected to abide by the law, as we all are, but it also needs to be protected by the law. Its members need to be treated with respect, to be free from discrimination and to be able to live their lives peacefully. What are the Government doing to support that? So far, all he has said is that it is a matter for the council.

[Lord Greenhalgh (Con)]

I have also said that there is a high bar for criminality, that no one should be discriminated against because of their race or ethnicity, that we are investing in measures to reduce hate crime and that we recognise that the Government play a part, particularly in funding. That is why there is funding available in the affordable homes grant, and I am sure there will be further announcements of funding that will increase the supply of authorised permanent sites and transit provision. We will continue to encourage negotiated stopping as another way of dealing with these issues.

Net Zero: Social Market Foundation Report

Lord Kennedy of Southwark Excerpts

Monday 1st November 2021 Lords Chamber

[Lord Kennedy of Southwark (Lab Co-op)]

My Lords, I refer the House to my interests, as set out in the register. I will follow up on the Question of the noble Baroness, Lady Scott of Needham Market. Rural areas, communities and local authorities face a range of problems, such as a reliance on private cars, a lack of charging points and distance from the decarbonisation of industrial clusters. Does the noble Lord agree that the specific, unique issues of the countryside need addressing to ensure that no one is left behind? If he does—he said that the Government do not plan to have a separate strategy—what is he doing to meet this challenge?

[Lord Greenhalgh (Con)]

The Government are providing many mechanisms to support rural areas. I point to the community energy projects, through the rural community energy fund, which is a £10 million fund to support community-run projects in England that benefit the transition to net zero. Net zero is half the story; adaptation to the consequences of climate change is equally important, and the Government are committing £2.8 billion in a six-year capital investment plan to reduce flood and coastal erosion risk.

Rural Poverty

Lord Kennedy of Southwark Excerpts

Monday 25th October 2021 Lords Chamber

[Lord Greenhalgh (Con)]

I thank my noble friend for her insight into the local challenges faced by rural areas. That is very helpful as we consider our approach to targeting the upcoming UK shared prosperity fund. That fund will help to level up and create opportunity right across the United Kingdom in places most in need and for people who face labour market barriers. We will set out more detail, as I have mentioned before, in the upcoming spending review.

[Lord Kennedy of Southwark (Lab Co-op)]

My Lords, I refer the House to my interests as set out in the register. First, has the Minister actually read the report referred to in the Question? Secondly, addressing in-work poverty is a subject that should concern us all. Taking that point, does the Minister accept that more rural locations have had their needs obscured and been disadvantaged by recent funding rounds, and would benefit from a fairer distribution of national funds?

[Lord Greenhalgh (Con)]

I have to declare to the noble Lord that we have a phenomenal army of policy officials who have dissected the guts out of that report. I am happy to acknowledge that I have read a summary from my officials rather than the report itself.

I would point out that of the two funds that we have been talking about, the UK shared prosperity fund, which has been piloted through the community renewal fund, targets rural areas in design—to the extent that 29% of those have a higher index of local resilience and are therefore being focused on and being captured, compared with a lower percentage of 22% for urban areas—so we are seeing a great focus on dealing with rural poverty, while of course the levelling-up fund is designed with the different outcomes in mind.

Building Safety Defects: Costs

Lord Kennedy of Southwark Excerpts

Monday 18th October 2021 Lords Chamber

Asked by

[Lord Kennedy of Southwark]

To ask Her Majesty’s Government what plans they have to ensure that victims of building safety defects are not liable for the costs of rectifying those failures.

[Lord Kennedy of Southwark (Lab Co-op)]

My Lords, I beg leave to ask the Question standing in my name on the Order Paper and refer the House to my interests as set out in the register.

[The Minister of State, Home Office and Department for Levelling Up, Housing & Communities (Lord Greenhalgh) (Con)]

My Lords, the Government are investing £5.1 billion to remediate unsafe cladding in residential buildings over 18 metres. The Building Safety Bill will require building owners to consider other cost-recovery routes for remediation before passing them on to leaseholders. A new developer tax and levy will make sure that industry contributes. Finally, for the small number of 11-to-18 metre buildings with cladding remediation costs, our support offer will ensure that leaseholders are protected.

[Lord Kennedy of Southwark (Lab Co-op)]

My Lords, that is a very disappointing and, frankly, repetitive response. There has been a clear failure on the part of the Government to protect the innocent victims of this scandal in building safety. The leaseholders need to be supported by their Government and they need to hear clearly from the Government that they are no longer expected to pay for other people’s mistakes. Why cannot the Government just say that and make it happen?

Leasehold: Building and Fire Safety

Lord Kennedy of Southwark Excerpts

Thursday 16th September 2021 Lords Chamber

Asked by

[Lord Kennedy of Southwark]

To ask Her Majesty’s Government what plans they have to ensure leaseholders do not bear the costs of repairing building and fire safety defects for which they are not responsible.

[Lord Kennedy of Southwark (Lab Co-op)]

My Lords, I beg leave to ask the Question standing in my name on the Order Paper. In doing so, I refer the House to my interests as set out in the register and say that I am from the wonderful borough of Southwark.

[The Minister of State, Home Office and Ministry of Housing, Communities and Local Government (Lord Greenhalgh) (Con)]

I declare my interest in the London Borough of Hammersmith and Fulham. The Government have invested more than £5 billion to remediate unsafe cladding in buildings over 18 metres. For the small number of 11 to 18-metre buildings with cladding remediation costs, our finance scheme will ensure that leaseholders pay no more than £50 per month towards this. A new levy and tax will ensure that industry contributes, and under the Building Safety Bill building owners must explore all reasonable ways to meet remediation costs before passing these on.

[Lord Kennedy of Southwark (Lab Co-op)]

My Lords, the action taken by the Government to date is just not good enough. Leaseholders feel abandoned by the Government. All the talk of levelling up and supporting communities means nothing. It is deeds not words that the victims need today. What will the noble Lord do today after this exchange to persuade his new Secretary of State that further action is needed? Will he come down with me to Parliament Square at 1 pm today to meet some of the victims and listen to their heartbreaking stories?

[Lord Greenhalgh (Con)]

My Lords, I am very happy to join the noble Lord in visiting the people who will be demonstrating today at 1 pm. This is continually a moving feast. I am happy to announce that we are increasing the amount of money we are putting in the waking watch relief fund, which has been a crippling cost for many leaseholders, by a further £5 million to the initial £30 million. That has helped around 20,000 leasehold dwellings and 264 buildings to date. We continue to ensure that we find ways to make sure that the original developer pays wherever possible.