Local Audit and Accountability Bill [Lords]

George Hollingbery Excerpts

Monday 28th October 2013 Commons Chamber

[George Hollingbery (Meon Valley) (Con)]

The right hon. Gentleman will know that the Bill enables the National Audit Office to provide value-for-money studies, but because he is well informed about local government matters, he will also know that the Local Government Association has expressed considerable enthusiasm for conducting these reviews itself. Is it not better that local government finds what it needs to make value-for-money judgments on, and starts those reviews itself?

[Hilary Benn]

I entirely accept the hon. Gentleman’s point. It seems to me that there is a case for both. Having read the deliberations in the other place, I am just reflecting that Ministers there really lacked enthusiasm for the continuation of central value-for-money work, but I take his point about local authorities coming together to learn from each other.

Thirdly, the Bill as drafted requires the appointment of new auditor panels. The health bodies, as we know, will have panels based on their existing audit committees. On the one hand, the ad hoc Committee that scrutinised the draft Bill described that as an added layer of governance and made a case for strengthened audit committees in order to meet the independence requirements of best practice. On the other hand, the contrary argument has been made that there would be difficulties in asking audit committees to do the work of the panels, not least because in many local authorities the audit committees have a much wider range of responsibilities. Perhaps when he replies, the Minister will explain how he sees audit panels working as sub-committees of audit committees.

Fourthly, on freedom of information, the Bill will weaken the public’s right to know. The Audit Commission is covered by the Freedom of Information Act, but, generally speaking, private auditors are not, so transparency, which the Secretary of State repeatedly tells us he supports, will be diminished. That is really important, especially as more councils are outsourcing work to private companies. We all remember the Government’s recent unhappy experience with the tagging contract scandal. Given that the Government’s view on applying the Act and the arguments they advanced in the other place have changed over time, it would be helpful if the Minister indicated whether there is any chance that their view might change again.

[George Hollingbery]

I am grateful to the right hon. Gentleman for being so generous in giving way. Is it not the case that clauses 21 and 22, when combined with clauses 24 and 25, mean that freedom of information requests are completely superfluous? Clauses 21 and 22 allow the auditor to request any and all documents not only from the council but from connected parties, and clauses 24 and 25 make that information available to the public, so why would one need an FOI request?

[Hilary Benn]

I do not accept the argument that the Freedom of Information Act is superfluous, because it depends on whether auditors seek the information in the first place. I think that, regardless of the action that auditors might or might not take, the public should be protected by having the right to request the information. That point was made extremely forcefully and eloquently by my noble Friend Lord Wills in the other place.

There are some other concerns. We need clarity on who will maintain the outsourced contracts when the Audit Commission finally disappears. What about certification relating to reimbursement of housing benefit claims? We welcome the movement of the national fraud initiative to the Cabinet Office, but the provisions on the purposes for which data matching can be used do not include the prevention and detection of maladministration and error, which we would like to be reflected.

That is what is in the Bill, but there is a great big hole in it. It is principally a backward-looking piece of legislation giving effect to the Secretary of State’s decision of three years ago. He has completely failed to make provision for auditing in the new world being built before our very eyes, which I think is an astonishing omission. The proposed audit arrangements simply do not provide for that changing world in which public services are managed and provided. We have shared services, community budgets, city deals and combined authorities, which are all part of a shift towards much stronger working between central and local government, yet the current and proposed audit arrangements still focus much too narrowly on institutions—the arrangements in the Bill for local government and the National Audit Office for Whitehall—rather than the work they do. Therefore, as community budgets develop, does it really make sense for different auditors to examine the use of the local government pound while the NAO examines the use of the Whitehall pound when they are being spent together? If the service is shared and common, so should the audit be. I hope that Ministers will reflect on that point.

Robust independent audit of public bodies is essential to ensuring public confidence in Government. It is up to us to ensure that we get it right, especially after the three years that have intervened, followed by a Bill that—I gently point out—took longer to gestate than a baby African elephant.

I turn now to clause 38. Let me say at the outset that one local authority publication, which the Secretary of State mentioned, is pretty clearly outside the letter and the spirit of the code—that is, East End Life, which is weekly, advertises property, and carries local news. The Labour leader in Tower Hamlets says that it is an expense that residents cannot afford. The question for the House is therefore a simple one: why has the Secretary of State not done anything about it already? Why has he not sought judicial review? It is no good his shaking his head—he could have taken action, given the fuss he is making, but he has chosen not to do so, and he gives no answer.

[Hilary Benn]

It would be a very important legal argument as to whether the courts would attach weight to what is a code. If the Secretary of State is that worried about East End Life, why did he not take action before coming to this House to ask for clause 38 and the extraordinary powers it contains?

The Secretary of State is asking the House to give him the right, if he feels like it, to control local council publications. We have recently had a great deal of debate about the royal charter following the Leveson report. [Interruption.] The Secretary of State is chuntering, but there is a lot more to say about this clause. The charge has been levied, quite wrongly, that politicians are trying to control what appears in the press, yet this clause really would give a politician the power to control, if he wanted to, what is written, how often, and in what way. This shows that underneath a lot of localist rhetoric, the right hon. Gentleman is nothing more than a centralist. I am astonished that Liberal Democrats appear to be happy to go along with a thoroughly illiberal proposal.

The clause would allow the Secretary of State to issue an order directing that one authority, or every authority, comply with his interpretation of one or all of the provisions of the code. I remind the House that the code covers paid advertising, leaflet campaigns, publication of free newspapers and news sheets, the maintenance of websites, the frequency of publications, the content of publications, and even display stands at party political conferences. Clause 38(1)—the first time I read this I could not really believe it—says the following—[Interruption.] I know that Government Members do not want to hear it. Perhaps the right hon. Gentleman could explain why he wants to be given this power:

“The Secretary of State may give a direction to an authority whether or not the Secretary of State thinks that the authority is complying with the code to which it relates.”

Roughly translated, he wants the power to give direction to a council even though he does not think that it is not complying with the code, and nor does anyone else. We are sometimes mystified by the way his mind works, but under this Bill he will not even have to answer to himself for his own thoughts and actions.

That prompts the question why the Secretary of State has put this measure forward. He advanced two arguments, the first of which is about competition with local newspapers. I agree that local newspapers are a very important part of our democracy. Their independent reporting holds us to account, and they give us important news and information about what is happening in our area. However, many local newspapers are in real difficulties as readership declines and people get more of their news from the electronic media. Sir Merrick Cockell, the highly respected Conservative leader of the Local Government Association, says:

“We’ve simply not been shown any evidence that council publications compete unfairly with local newspapers.”

Such evidence as we do have suggests that the amount of advertising revenue taken by council publications is relatively small, especially compared with the amount of revenue contributed to local newspapers by way of statutory notices.

It is therefore very curious that, despite great play being made in the Secretary of State’s speech and in all the consultation documents of unfair competition and the loss of advertising revenue, it was reported a little while ago that he had indicated to a private meeting of Conservative councillors at the LGA conference that the requirement to place statutory notices in local newspapers is going to be phased out within a couple of years. I would be happy to give way to the right hon. Gentleman if he would like to clarify the Government’s position on the future of statutory notices. The House will have noticed that he has nothing to say. That is because on the one hand he is arguing that council magazines and the advertising revenue they take are a terrible threat, while on the other hand it seems, as reported by Conservative councillors who were at the meeting, that he is thinking of withdrawing a much larger amount of money that papers get from local councils in the form of statutory notices. The truth is that his position is utterly inconsistent.

[George Hollingbery]

I am grateful to the right hon. Gentleman for giving way; he is truly being generous with his time. Is he able to give any particular reason why local papers could not report statutory notices as a news item rather than as something that they are paid to do? Does he think it is right that the public purse subsidises commercial organisations like local newspapers when they have plenty of other opportunities to make money?

[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.

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[Chris Williamson (Derby North) (Lab)]

The Government have presented us with yet another very bad Bill. Indeed, it is so bad that it is difficult to know where to start, but let me begin by saying that there is a certain irony in what we are doing today. As was pointed out by my right hon. Friend the Member for Leeds Central (Hilary Benn), the Audit Commission was established by a former Conservative Government 30 years ago, and here we are now, debating this Bill because another Conservative Government want to get rid of it.

Government Members, including the Secretary of State himself, have suggested that the exposure of the gerrymandering of Westminster city council, which was exchanging homes for votes, had nothing to do with the Audit Commission. I wonder, however, whether the regime that the Government are now proposing would have been able to unveil that appalling scandal, as the district auditor did then. It really was an absolute disgrace, and it led to a huge surcharge on the leader of the council.

The role of the Audit Commission has been both extended and reduced over the years, but I often found its interventions very helpful when I was leader of Derby city council. It was able to assess the effectiveness of local public services, thus providing us with a benchmark in relation to local authorities in other parts of the country and the services that they provided. It did so by means of the comprehensive area assessment which has been so ridiculed by the Secretary of State, and which was one of the first things to be ditched when the Government came to office.

It is probably not surprising that the Government made that decision, as it coincided with their imposition on local authorities of unprecedented cuts, which have continued year after year. The comprehensive area assessment would doubtless have highlighted the significant diminution in the quality and breadth of the services provided by local authorities that resulted directly from the Government’s cuts agenda—and a very unfair agenda it was. As we know, the cuts fell most heavily on the local authority areas in greatest need, although, perversely, some authorities in other parts of the country received an increase in Government grant. I think that, had it been allowed to continue, the comprehensive area assessment would have put the Government parties in a highly embarrassing position.

[George Hollingbery]

When I was a portfolio holder on Winchester city council, I had to respond to the comprehensive area assessment. One of my favourite statistics that it made me report was the number of buildings that were open to the public and the number of those buildings that were accessible to disabled people. I managed to improve the ratio in my first year in post, simply because we closed a building to the public. Do Members actually think that that constitutes a useful set of reporting targets for any normal council? If the hon. Gentleman is really so keen on the comprehensive area assessment, may I ask whether he would reinstate it if he were the relevant Minister in a Labour Government?

[Chris Williamson]

The hon. Gentleman makes an extreme point to illustrate his argument. No one is justifying unnecessary targets. There was perhaps an over-burdensome target culture, but surely that is not a reason to throw the baby out with the bathwater. It would be an extreme overreaction to get rid of the whole shooting match just because there were perhaps some overbearing and silly performance indicators, although there was certainly scope for improvement. As my right hon. Friend the Member for Leeds Central said, we accept that the Audit Commission is going, but what is being put in its place leaves a lot to be desired.

Government Members have said that getting rid of the Audit Commission will realise significant savings, but the truth is that most of the savings have already been achieved by axing the inspection work for which the commission was responsible. It seems that this is yet another case of double counting by the Secretary of State, as there is not much evidence to support his statement that there will be a saving. Indeed, many experts say that fees are likely to increase as a consequence of scrapping the commission. The draft Local Audit Bill ad hoc committee called for the publication of a new financial impact assessment and said that the baseline should be 2010-11, rather than 2009-10. If that were done, we might get a clearer picture of what the savings will be, if any, as a consequence of the Bill.

[George Hollingbery]

The hon. Gentleman is being generous in giving way. I am puzzled by the putative ideas on the savings that are being made. The Audit Commission has recently re-let 70% of the business that it did in-house to private contractors and achieved 40% savings—some £40,000 per council, I understand, although that figure may be slightly wrong. Nevertheless, there was a 40% reduction in the costs of audit. Does the hon. Gentleman not recognise that that is a real and proper saving that would not have happened if the Audit Commission were still in place?

[Chris Williamson]

Let me quote people who perhaps know a little more about these things than me. The draft Local Audit Bill ad hoc committee looked at the matter in detail. It

“heard conflicting evidence about whether and how much public money is likely to be saved by implementing this legislation.”

I have struggled to find anyone who thinks that the proposal is a good idea.

The Audit Commission said:

“Under a free market model, the current benefits of pooling auditors’ costs will be lost and councils in remote geographical locations”—

many of the locations represented by Government Members—

“will have to meet the economic cost of the audit. In some cases this may be significantly higher than historical fee levels.”

The Local Government Information Unit said:

“If the market concentrates further, or even stands still, this will eventually lead to higher, not lower, fees.”

The Select Committee on Communities and Local Government has pointed out that the Government’s proposals for local government

“contrast with the situation in central government, where the NAO is reducing the percentage of work that it contracts out to private firms”.

I do not understand why that double standard is being applied by the Government when it comes to local government. Cynics might say that the Government are creating yet another money-making cartel. We know that the Conservative party has form in using taxpayers’ money to enrich vested interests in the private sector. We need look no further than the privatisation of the utilities, with millions of consumers being ripped off on a quarterly basis by the big six utility companies. We could also look at railways privatisation, which has seen the railway companies fleecing the travelling public, or the deregulation of the private rented sector, where we have seen a massive hike in rents. As a consequence, the housing benefit bill has gone through the roof—some £10 billion a year is going into private landlords’ pockets. This is yet another example of the Conservative party flagrantly using taxpayers’ money to enrich vested interests in the private sector. It is a shameful abuse.

The Communities and Local Government Committee hit the nail on the head:

“Unless the Government can crack the problem of the very limited competition in the audit market in the UK, it will be open to the accusation that the abolition of the Audit Commission is not a measure to save public money but merely a mechanism to transfer public money into private hands.”

I could not put it better myself. Clearly, that is an endorsement of my suspicion about the Government’s real motive for introducing the Bill.

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[Chris Williamson]

Indeed. As I understand it, those were the unanimous findings of the Communities and Local Government Committee.

The Bill is misconceived in another respect. My right hon. Friend the Member for Leeds Central dealt with this eloquently. In the Bill, there is no recognition of joint working, which is essential; it was increasingly important when I was leader of Derby city council. We worked to bring other public sector agencies on side with us to get more bangs for the public sector pound that was being spent in Derby, and that is even more essential as the budget at our disposal diminishes.

Therefore, I hope—my right hon. Friend made this plea—that the Government will reflect on the matter. If, as seems likely, they proceed with the Bill, I hope they will consider how the audit process could be made more relevant and up to date, given the situation we find ourselves in and the way in which public services are delivered. It does not make sense to require each public sector body to undertake a separate audit. It would be far better to recognise the fact that local authorities and other public sector agencies are working collaboratively. It is far better to have a collective audit that recognises the reality of the way in which public services are delivered in this day and age.

[George Hollingbery]

I was interested in the comments by the shadow Secretary of State, because the explanatory notes to schedule 4, paragraph 1, say:

“This paragraph sets out the different ways in which a body may meet the requirement to have an auditor panel. It is intended to provide flexibility for different arrangements that can reflect local circumstances and, for example, any joint working arrangements.”

There are clearly provisions in the Bill to deal with that matter.

[Chris Williamson]

But not—[Interruption.]—as my right hon. Friend the Member for Leeds Central is pointing out sotto voce, where there is a national and local collaboration in that sense. That is the point. This is not a partisan matter; I hope that the Government will take that on board and make that sensible amendment so the Bill is more fit for purpose.

I want to touch on the Secretary of State’s Orwellian proposal effectively to take charge of all council communications across the country. Whatever happened to the Secretary of State’s brave new world? When he first came into office he promised the end of what he described at the time as

“the Ministerial command and control system”.

Well, if this is not a ministerial command and control system, I do not know what is. This is the party that promised us localism and that promised it would sweep away the controlling hand of central Government. What a joke!

The Secretary of State has most certainly gone back on that, and his justification for his position simply does not stand up to examination. Let me quote a couple of experts in the field. The National Union of Journalists said:

“We do not believe that this element of guidance reflects the needs of many communities, nor the practicalities of providing prompt, accurate advice and information to them. In areas where there are no, or limited local newspapers”—

that, again, will include the constituencies of many Members on the Government Benches—

“then sharing planning details, service changes and details of consultations on a quarterly basis is insufficient.”

Even coalition Members in the other place have criticised this proposal. Lord Tope said:

“All we have had from the Government is rather silly and misleading statements from the Secretary of State about ‘town hall Pravdas’.”—[Official Report, House of Lords, 22 May 2013; Vol. 745, c. 898.]

Baroness Eaton, who, like the Secretary of State, is a former leader of Bradford city council, said

“there is no evidence that council publications are competing unfairly with local newspapers and, by the Government’s own admission, very few councils are breaking the existing recommendations”

and,

“It is therefore regrettable that many of the proposed measures in the Bill centralise powers to the Secretary of State and allow central government to interfere with matters that should rightly be decided at a local level.”—[Official Report, House of Lords, 22 May 2013; Vol. 745, c. 903 and 902.]

The Conservatives claim to be the great localists. When I was on the Front Bench and said that the Labour party is the true localist party, Conservative Members scoffed, but here we have a clear example of the Conservative party being the true centralisers in this country today.

We must also consider the retrospective impact of the proposed council tax referendums. The hon. Member for Bromley and Chislehurst (Robert Neill) referred to that and suggested that somehow it was not really an issue, but I beg to differ. I genuinely think that there is a real issue, which goes a long way towards undermining city deals—a welcome innovation as they give more powers to local authorities in the major core cities around the country—although I think the Government should go further in terms of devolving powers.

Again, I could not find anybody with a good word to say about this part of the Bill. The LGA says it jeopardises growth-generating investment. The country is on its knees and we are barely back into growth, so it seems absolutely crazy to deny the opportunity of growth-generating investment now. The Chartered Institute of Public Finance and Accountancy says it will confuse local accountability. Baroness Eaton said:

“It is like revising the speed limit downwards and then fining any motorist who has not obeyed the new limit before it was introduced.”—[Official Report, House of Lords, 22 May 2013; Vol. 745, c. 903.]

The truth of the matter is that local authorities are reaching agreements with levy-imposing agencies with whom they are working in partnership. They will have made arrangements going forward and some of the fees will be increasing over time, and that could push the council tax increase above the threshold at which a referendum must be called. That could leave councils in a very difficult situation. What will happen if the referendum results in opposition to the increase being imposed? The fees will still have to be paid. It will simply mean there will be even deeper cuts over and above the unprecedented cuts that have already been imposed on local authorities.

We know that many local authorities are heading towards a situation in the very near future—in the next financial year and certainly the year after that—where it will not be possible to deliver any non-statutory services. The litter will not be removed from streets and grass verges will be growing out of control. What is going on here? This is simply unacceptable. These are services that define a decent and good society, yet they are being put in jeopardy still further by this part of the Bill.

This is a dog’s dinner of a Bill, as is clear from what has been said not only by my right hon. Friend the Member for Leeds Central and me, but all the experts on these matters. They are all saying the Government have got this wrong. I urge the Minister to take a long hard look in Committee at the provisions contained in this Bill, and to perform some serious surgery and agree to the amendments we will be putting forward to try to make a better job of what is a very poor Bill. I think it will create a very difficult situation for local authorities, end up costing more money and ill-serve the people in the local authority areas that will be affected.

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[George Hollingbery (Meon Valley) (Con)]

Last time I spoke on local government matters of this complexity—this is a complex Bill—a colleague grabbed me from behind after I had finished and said, “By Christ, you seemed to know what you were talking about, but God you were boring.” I think I am likely to get the same response at the end of this speech, so I hope that Members will excuse me before I start.

I welcome the abolition of central auditing and inspection, which was highly bureaucratic and rarely had any real effect. It led to very little action, at least in my council, and was highly burdensome and expensive. Indeed, just putting in the systems to cope with it cost my council £50,000. That seemed completely over the top given that the council raises only £4 million in council tax.

I have already given an example of one of the ludicrous statistics that I had to collect, but I would like to share a couple more. We had to report the percentage of the council work force who were of black and ethnic minority origin compared with the percentage in the local area that we served. In one year, we had a 25% fall in that indicator because one person retired.

We were also asked to report on the time taken to re-let local council housing. Sitting here in Westminster that seems like a sensible thing to measure, but in Winchester we had a serious problem with hard-to-let apartments, many of which had been un-let for a year, perhaps two or even three years, because they were 30 or 40 years old and no longer suited to modern conditions. The better we did on that, the worse our indicator got, because the length of time we had taken to re-let council flats went up and up as we added a year or perhaps two years every time we re-let a council flat. That is not what was intended, and it demonstrates the problem with large central organisations. I very much welcome the abolition of the system.

Members have talked about the amount of money that has been saved by the abolition of the Audit Commission. There is some debate about this, but it is undeniable that the 70% of local government audit business that was previously handled in-house by the Audit Commission has been re-let at a 40% reduction in the amount charged. That is a real gain at a time of money difficulties, and it is to be welcomed.

The reason I have fairly lengthy notes is that the Communities and Local Government Committee, on which the hon. Member for Derby North (Chris Williamson) also served, reported on this issue in July 2011. I should like to go through some of the recommendations that we made, compare them with the Bill, and see whether what we recommended has been delivered. In evidence, we detected some nervousness about violating the principle that public bodies should not appoint their own auditors. I have never understood the problem with that. I cannot see the philosophical difference between the private and public sectors in terms of audit. In both cases, roughly the same requirements hold. Yes, we have to be absolutely confident that public money derived from taxation is properly spent, but why is that, in principle, any different from individuals giving money to private companies that has to be properly handled and is subject to the rules of the land? In both cases, the public must have full confidence that the law is being upheld and that their money is being spent as intended. I recognise that a lack of confidence in how public money is being spent threatens the whole principle of a Government being able to raise taxation in the first place, which lies at the very heart of our democracy. That said, I cannot see that there is any greater need than a general confidence in the true and fair view of the private sector on which so much of our economy rests. I cannot see why this is any more important in the public sector than in the private sector.

The Committee felt that the change was no great threat as long as sufficient safeguards were put in place, and I firmly believe that the Bill provides them. A reasonable summary of our principal recommendations is that any replacement audit regime should be independent, transparent and effective. Let us then look at the Bill to see whether it contains remedies to those three issues. We asked that any scheme be “proportionate and risk based”. Paragraph 1 of schedule 6 deals with that in that it specifically allows the code of audit practice to be different for different authorities. That is exactly as it should be. It is somewhat at odds with our request for “ensuring consistency”, but as long as all audit is driven by the same overarching principles, the need for a proportionate approach trumps uniformity.

We asked that local so-called value-for-money reporting be carried out by each authority rather than the auditor. Clause 19 provides that auditors must be satisfied

“that the authority has made proper arrangements for securing economy, efficiency and effectiveness in its use of resources.”

It is unclear how that will be dealt with in detail, but we must suppose that it will be covered in the code of practice issued by the National Audit Office. I urge the NAO to accept the Committee’s recommendation and leave the form of that to local authorities to supply as they see fit and for auditors to judge adequacy and robustness.

We also asked for

“clear and uncontestable protections for assuring the independence of audit committees and auditors”.

That is unequivocally provided for in clause 9 and schedule 4 for audit committees and in schedule 5 for the auditor. We asked that any appointment decision rest with full council rather than another body of councillors to ensure that the decision could not be made on the quiet. Paragraph 1 of schedule 3 does exactly that.

In the other place, Lord McKenzie tabled amendments to allow local authorities to create a voluntary sector-led body to appoint auditors, thus removing the need for all local authorities to have their own independent audit committee to appoint auditors. That is eminently sensible, and I am absolutely sure that it will lead to competitive tendering that will reduce bills for all authorities. I am pleased, as was the right hon. Member for Leeds Central (Hilary Benn), that Baroness Hanham conceded that in the House of Lords and that amendments to that effect will be tabled in Committee.

In passing I note that where authorities choose not to join such a body, there may be scope for having one committee in a council that deals with all issues that require independent control. I suspect that that does not need addressing in the Bill but is something that councils could do for themselves. To my mind, there is at least one other such committee—that setting councillors’ rates of pay and expenses. There could be one committee that has a majority of independent councillors and/or members and an independent chairman that would be allowed to deal with all issues that required an independent view.

Clause 16 provides for the regulations on the removal of auditors, on which the Committee concluded that there should be a double lock, whereby both full council and the audit committee had to recommend the removal of an auditor before it could happen. Clause 16 specifies only that regulations may be issued on that subject. We will need to see the detail of the secondary legislation to be completely certain about how the issue of removal will be dealt with, but I am confident that the Government understand that protecting auditors and their role in councils is extremely important, and that removal and how it occurs must be dealt with adequately.

On the qualifications of auditors, Lord McKenzie raised in the other place the issue of specific qualifications for auditors in the public sector. Given that I have some experience of both public and private audit, I can vouch for the material difference between the two—some might call it a gulf—and I welcomed the Government’s commitment in the Lords to add words to that effect. Those words now appear in clause 17 and paragraphs 8 and 13 of schedule 5, which will establish a register for qualified individuals. That is a sensible move. If we are going to have independence of audit, we need to make absolutely certain that those who are eligible to be auditors are properly qualified and that there is a register where we can check whether they are properly qualified.

The Committee also commented on the transparency of the process, a topic that was also brought up in the Lords. I do not intend to dwell on it for too long, because I have already made clear in an intervention on the shadow Secretary of State that I think that clauses 21 and 22, combined with clauses 24 and 25, make it unnecessary for the regime to be subjected to freedom of information legislation.

The Committee was concerned that the right to object to accounts should be proportionate and reasonable. Many members of the Committee and witnesses reported that the right to object had been substantially abused in the past. I suspect that many who have worked in local government will recognise that that is a tactic used by people who are dissatisfied with the council in general or perhaps even with one particular councillor.

One individual cost my own council more than £50,000 in a single year by challenging the accounts in what can only be described as a vexatious manner and an angry reaction to a decision that had affected him personally. As such, I welcome clause 26, which, while allowing timely and significant objections, seeks to limit the ability to misuse the power.

The Committee was particularly concerned about the matter of public interest reporting. We asked that that element be safeguarded when the Bill was introduced, but we did not seek to prescribe how that should be done. My reading of the Bill is that the issue is more than adequately covered by schedule 7.

Lord McKenzie probed the question of whether the National Audit Office should be explicitly tasked with performing the role previously played by the Audit Commission as mentor during the public interest reporting process, for which the Committee also asked tangentially. Baroness Hanham responded in the Lords by saying that, given the NAO’s role in the design and scope of local audit, she felt that it would always be there to give advice. I think that that is a reasonable assessment and it seems that Lord McKenzie agreed.

Finally, the Committee felt that the proposal for thematic studies previously undertaken by the Audit Commission to be undertaken by the NAO was entirely workable. Indeed, we said that it “may have some advantages”. We also expressed the view that the Local Government Association was well placed to do more work of this sort outside the more formal NAO structure. My understanding is that the LGA is keen to progress this matter, and I would welcome that.

It seems to me that, given all the measures under discussion, any reasonable observer can safely conclude that the new regime gives more than adequate confidence that the new system will be robust, transparent and independent.

I want to comment briefly on a couple of other aspects of the Bill that deal with matters other than audit, and it will not surprise anyone to know that one of them is “The Code of Recommended Practice on Local Authority Publicity”. At the moment the code is only advisory and continues to be abused by only a very small number of authorities. It is right that public money should not be allowed to pay for partisan political activity, save in very limited instances and when specifically authorised by Parliament; Short money is a particular case in point. The Government are absolutely right to try to stop such abuse. It cannot be right to have political campaigning on the rates, but I ask the Minister to be careful.

At present a number of authorities breach the code, but they do not do so for political gain; usually, it is related to the frequency of publication. There is an argument that quarterly publishing is more than adequate and that to allow more would threaten the viability of local newspapers, particularly if the content of the council newsletters is not limited solely to council matters, takes advertising and is laid out in such a way to compete directly with newspapers. I have some innate sympathy with that position, but I must admit that the evidence that there is truly an adverse effect is scant.

My real worry is that, while the enforceability of the code is clearly important, so too is the proportionality of the code itself. I suspect that Ministers are not, in fact, too worried about the frequency of publication. Their real worry is the partial nature of a very few publications—the “Pravdas,” to quote the Secretary of State—but legal officers on councils will not see it that way. Understandably, once the code becomes enforceable their advice will be that they cannot recommend anything other than that which the code allows, which includes not publishing more frequently than quarterly, as detailed in paragraph 28. I believe that as long as local authorities can adequately justify a more than quarterly publication we should not seek to prevent them from doing so.

A more than quarterly publication would have been costly and pointless for my own district council. We simply did not have enough to tell our local electorate every single week or even once a month. At the same time, a number of much larger authorities could easily fill a publication monthly with objective, useful and relevant information for residents. May I encourage the Minister to look at the code with a view to dealing with that point?

Will the Minister also look again at the publication requirements for statutory notices, which have already been mentioned? Although it is right that we consider the effect on local newspapers of the competition provided by local authority publications, it is also right that we consider how we spend public money to best effect.

One of my local editors made the argument to me that it is important for readers to be able to see what is going on in a public authority and that the publishing of statutory notices in newspapers is an important part of that process. I pointed out to him that if he truly thought that to be the case, there was nothing to prevent the paper from reporting on them and publishing the list itself if it felt that strongly about the matter. The simple fact is that the vast majority of the public access data about planning, licensing and so on from public notices and, thereafter, council websites, rather than from the local paper.

This issue was a bugbear to me as a portfolio holder. It was expensive, inflexible and of little advantage to the public, and it cost my council—a small district council—£32,000 a year. It may have been to the advantage of the profitability of newspapers, but I really do not think that that should be a relevant factor.

Finally, I turn to council tax referendums. It is clear that the Government are right to give local voters the right to vote on council tax increases that are above the limit set by the Government as reasonable and proportionate. I believe that is much better than a cap, allowing as it does for a council to take its case to the voters if it believes it has a strong enough case to persuade them.

The Bill corrects an anomaly in current regulations that omit levying authority charges from the calculations that determine the proposed percentage increase on council tax. We have already had the argument about why they should be added, but there is a difficulty that the Government need to address. If there needs to be a council tax referendum because the amount charged by the levying authority pushes council tax above the Government’s limit, there is no legal way in which the council can force that levying authority to change its charge. Neither is there any duty on the levying authority to hold a referendum—that falls to the local council taxpayers. I believe that that is wrong. We have to force some decision on levying authorities if this particular provision is to work correctly.

Three simple possibilities have occurred to me. It may be that none of them is the right thing to do, but they are all possible. The first is to impose a cap on levying authorities, which is not something that I would favour. The second is to impose the cost of the referendum required as a result of the charge from the levying authority on the levying authority. The final one is to make a no vote binding on the levying authority, such that it has to change the charge back in such a way that the overall council tax will rise only by the amount specified by the Government. I would welcome a commitment from the Minister to consider the matter and hope he will make some proposals in Committee.

In conclusion, I am confident in the general thrust of the Bill and in the vast majority of its measures. I will certainly vote for it tonight should there be a Division, although I suspect that is unlikely given what others have said. I ask, however, that Ministers address some of the concerns I have raised when the Bill goes to Committee.