Local Audit and Accountability Bill [Lords]

Annette Brooke Excerpts

Monday 28th October 2013 Commons Chamber

[Hilary Benn]

The hon. Gentleman makes a perfectly fair point, partly because of the changing way in which people are getting their news. He is right that there is nothing to prevent papers from publishing those notices anyway, and I think that everybody recognises that we are moving towards a different era. The point I am making is that the Secretary of State has jumped up and down to complain about advertising revenue, which is very small compared with the much larger revenue that comes from statutory notices, hence the inconsistency of his argument.

[Annette Brooke (Mid Dorset and North Poole) (LD)]

Should the main concern not be the best use of council resources? Is it really a good use of those resources if they are paying for statutory advertisements that most people manage to miss?

[Hilary Benn]

That is a fair point, as I have said, but perhaps the hon. Lady should have a conversation with the Secretary of State about what his policy is, because we are none the wiser. Indeed, when the code of practice was originally published, the Government specifically rejected a prohibition on authorities taking third-party advertising in their magazines. That is what paragraph 8.25 of the explanatory memorandum had to say.

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[Robert Neill]

There is often a material difference, depending on the precise nature of the language used and the objectives sought to be put across. That is precisely why the Bill is framed in such a way as to provide discretion for the Secretary of State to act where a number of triggers are coming into play. I do not think that intervention worked from the hon. Gentleman’s point of view either.

Let me deal with the issue of council tax referendums. A great deal of objection was raised in the other place, but I do not believe that it was all genuinely warranted. I am glad that the right hon. Member for Leeds Central did not pursue the argument of retrospectivity to the extent that it was pursued in the other place. My noble Friend Baroness Hanham dealt with that effectively, making very clear the Government’s intentions in this regard. Levying bodies and their principal councils had clear notice, so that argument has been knocked on the head. I want to take the opportunity to pay tribute to Baroness Hanham’s work as a Minister in the Department for Communities and Local Government. She was a fantastic and unusually hard-working colleague—someone who probably has more experience in local government than many people here will have forgotten about, let alone learned from. I hope I am allowed to say that, Madam Deputy Speaker.

The key objective of council tax referendums is to protect the council tax payer. It could not be right to get to a position where it was possible to have a degree of expenditure shunting. We sometimes hear about cost shunting, but a degree of expenditure shunting is possible in theory, from the constituent member authorities of a levying body on to the levying body in the knowledge that the expenditure moved on to the joint body would not be captured by the council tax threshold referendum. With respect, that would be pulling the wool over the eyes of the council tax payers of the local authority’s area. The council tax referendum proposals are therefore sensible in protecting council tax payers by removing a loophole that could have been open to that sort of abuse. As the Secretary of State said, when we looked at city deals, we found that the amount involved was not such as to cause the extent of the problems suggested.

For a raft of reasons, the levy on some local authority areas amounts to more than the amount of council tax itself. The levies account for something like 56% of council tax bills—in Liverpool, for example. I am sure that all hon. Members who support our proposals for council tax referendums would agree, in principle at any rate, that they exist to protect the council tax payer. It surely cannot be right that under current arrangements over half the spend is exempt from control by a referendum.

[Annette Brooke]

I quite understand the intention behind this measure, but could my hon. Friend help me with this query? Is not an unintended consequence possible? If the referendum were lost, the levy went ahead and the council tax was frozen, might not the penalty fall back on the council, which would have to bear the costs and cut back on its own services?

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[Annette Brooke (Mid Dorset and North Poole) (LD)]

I had better start by declaring that I am a vice-president of the LGA, as it is being mentioned rather a lot in this debate. I also want to thank the Secretary of State—albeit in his absence—for his introduction of the Bill and his enlightening examples. I thank, too, the shadow Secretary of State for his visual aids and his account of his search for plots, which was interesting.

As the Bill has passed through the other place, it has already been considered in detail, and a large number of amendments were made, although some of them were minor and technical. I was very pleased that the Government undertook to introduce more amendments in the Commons, and I was also pleased by the announcements that consideration will be given to the modernisation of parish polls and the introduction of more openness in the recording of council meetings. It will be very good on occasions for people to be able to watch them at home and be able to switch off, rather than having to set off on what might be a long journey and then have to sit through a great deal of business before getting to the relevant part.

I want to comment on four main areas of the Bill. First, I want to discuss the principles behind the abolition of the Audit Commission, although I recognise that today we are really only talking about abolishing the residual part of it. I thought we had achieved a consensus about the abolition, until I heard the speech of the hon. Member for Derby North (Chris Williamson) and now I am not so sure. I recall the many briefings from all the councils in my constituency that have included reference to the burdens and costs arising from this set-up, always with the rider, “There is never any compensation from central Government, despite all these burdens placed upon us.”

The Audit Commission did become bureaucratic; it changed from its early purposes, there was little incentive to reduce its costs, which were paid for by local bodies, and its approach encouraged local bodies to focus more on the views of the Audit Commission than those of local people. The reforms in this part of the Bill will create a more efficient audit system. They are part of this Government’s wider drive to give greater responsibility to local bodies and encourage local people to hold those bodies to account, and the Bill is a step in the right direction. Councils are perfectly capable of appointing their auditors, as companies, charities and foundation trusts already do, and are best placed to decide what arrangements suit them locally. It should not be for central Government or anyone else to dictate to local bodies the people they should appoint. Under these reforms, they should know exactly what they are paying for and have control over their procurements. I am sure that we will discuss whether we are ending up with a cartel or with competition in greater detail in Committee.

The Secretary of State said that the expected savings from the abolition of the Audit Commission are estimated to be £1.2 billion. Despite the comments made by Labour Members, I felt that it was good to know that, unlike with some other Bills passing through this House, some pre-legislative scrutiny was undertaken on the then draft Local Audit Bill.

The Local Government Association wants the Bill to be amended to allow councils to continue to procure external audit nationally and, in so doing, avoid the need to establish independent audit appointment panels. Lord Tope said on Second Reading:

“In my long experience of local government, I have yet to meet anyone who has been clamouring to be a member of an independent auditor panel. That is not usually the way in which public engagement is sought by the public.”—[Official Report, House of Lords, 22 May 2013; Vol. 745, c. 898.]

I am pleased that the Government have been in dialogue with the LGA and agreed to work up an amendment that will create a sector-led body to offer councils an opportunity to opt in to a national procurement option. The LGA would also like the current audit contracts to be extended until the completion of the 2019-20 audits, in order to lock in significant savings—that is very important in these times of austerity. I imagine that matter will also be discussed in greater depth in Committee.

On council tax referendums, closing a loophole to prevent unaccountable levying authorities from exerting pressure on council tax seems a laudable aim—however, I have two buts to add. As a localist, I am not keen on council tax referendums—an alternative to capping—because they interfere with local decision making. However, I accept that, in these times of austerity, council tax freezes and controlling council tax are very important controls of the cost of living for many hard-working families. Secondly, I am concerned about the unintended consequences if the council and the levying board do not work perfectly together, despite the fact that the council might have representatives on the levying board. A financial risk is also placed on the local authority, which it could well do without in these difficult times. As Labour Members have said, there could also be a perverse incentive in terms of growth, whereby much-needed investment in infrastructure could be curbed, which does not seem right. I also share the concerns about the retrospective nature of the provision. So there are definitely questions to be answered here.

What I really want to see is transparency for the general public. Both on precepts and levies, members of the public are confused by the newspaper headline, “Your council tax is frozen”. They might not go through all the details in the Bill—I accept that the details are in place—but the bottom line for them is that their council tax is not frozen. That makes people very angry, because they do not see the accountability in the system. So I have just a few questions about that proposal.

The publicity code has been much mentioned this afternoon. My experience of local government, public relations departments, and council newspapers and publications has led me to conclude that the administration —the party in power—has a greater enthusiasm for having a big PR department and good, big, flashy newspapers than the opposition. Normally, the opposition will say, “We can find savings in the budget by slashing the PR budget.” That is usually the proposal on budget-setting night. However, if the opposition party then moves into control, it suddenly finds that the PR department is rather useful, after all. There are rightly questions about this money and the way it is spent, but a council publication has an important role to play; it certainly means that the public become more engaged, even if that is just a case of knowing where grit bins will be in icy weather and what provision is going to be made. Such publications are important disseminators of information for the many people who still do not access the internet. We cannot have all the information in that format at the moment, so the newspaper is of importance.

Given that not many examples of abuse are being provided and that most local authorities are probably not going to be affected by this measure, I have a concern that we may be using a sledgehammer to crack a nut—that question needs to be asked. Again, the measure slightly offends my localist principles, because the local council should be making the decisions and standing up to be counted when it is seen by its electorate as wasting money on these “lavish” publications. I am not at all convinced by the argument that such publications are in widespread competition with local newspapers, and the evidence would seem to be against that view; so, again, questions remain. I can see what the Government are aiming to do, but we have to recall that the provision of information and a council being outward looking is a good thing, even if most of the photos in the newspaper are of members of the ruling party.

I wish to end by talking about statutory notices. The LGA has called for the introduction of a new clause that would remove the duty on local authorities to publish statutory notices in their local newspapers. It would not remove the duty on councils to inform their residents about the statutory notices or any other area of council policy; it would just allow councils to decide whether or not the local newspaper was the best place to do that. It has been estimated that adopting the new clause could save local government at least £26 million per year, which is a considerable sum, and more cost-effective methods of conveying this information are available. I believe an Opposition Member intervened to suggest that estate agents and other professionals look at all the public notices, but they should be there for ordinary members of the public, who are the ones who do not spot the notices that affect them. So I do not feel that the most effective method of conveying information to the bulk of council tax payers is being used. The professionals who need to know this information could access it online; perhaps it is paper notices that are needed for residents. Will the Government repeal this outdated and expensive statutory requirement? Such an approach would be strongly welcomed by all parties in local government.