Budget Responsibility and National Audit Bill [HL]

Lord Touhig Excerpts

Thursday 9th December 2010 Grand Committee

Moved by

[Lord Touhig]

41A: Clause 15, page 5, line 36, leave out “such person as may be so specified” and insert “the Advisory Committee on Business Appointments and abide by the decisions of the Committee”

[Lord Touhig]

My Lords, perhaps I may at the outset apologise if I am partly responsible for your Lordships having to meet again today. I very much regret that I had not anticipated the speed with which your Lordships would complete their deliberations on earlier amendments. Although I was around on Monday, I was in the Chamber. I apologise again if my failure to be here has meant that the Committee has had to meet again today.

I apologise also for the fact that this amendment is a manuscript amendment. My original Amendment 41 was deficient in that it used the term “Advisory Committee on Public Appointments”, when it should have said “Advisory Committee on Business Appointments”. I took the information from the 15th report of the Public Accounts Commission. I am afraid that I should have been more careful and checked out that information.

Until earlier this year, I served on the Public Accounts Committee in the other place. As a result of that experience, I have been able to witness at close hand the tremendous work that the National Audit Office does and to see how important the work of the Comptroller and Auditor-General is in keeping a check on how government spends the taxpayer’s money. Crucial to the role of the C&AG is the independence of the person who occupies that office. It is vital that the office is both independent and seen to be independent. For this reason, none of his decisions should be seen as being born of self-interest.

Under the Bill, future appointees to the office of the Comptroller and Auditor-General will serve a one-term period of a maximum of 10 years. There will be the real prospect of former C&AGs, on leaving their appointment, seeking other employment. Indeed, in a letter to me following Second Reading, the Minister made that very point—I have copies if any noble Lord wishes to have sight of it. In the letter, the Minister points out that the Government hope that future C&AGs will want to continue their careers after they complete their 10-year term of office. If this is to be the case, it is important that sufficient safeguards are in place to ensure that that does not compromise the position of the Comptroller and Auditor-General in office.

The Public Accounts Commission’s 15th report of March 2008, to which I have referred, contained a number of proposals that sought to create safeguards. The Bill, however, reduces some of them. The commission proposed that the former Comptroller and Auditor-General should abide by decisions of the Advisory Committee on Business Appointments if he or she were to take up any further employment having left the job. My Amendment 41A would require this.

The Bill states merely that former C&AGs should consult with such people as may be specified by the Public Accounts Commission. I understand from the Minister’s letter that the wording in the Bill would allow for more flexibility on which individuals or organisations were asked to give advice. While I understand from the Minister’s letter that the wording in the Bill would allow for more flexibility on which individuals or organisations are asked to give advice, it could result in inconsistency over time, as to both who gives the advice and what advice is given. It is fairer on former Comptroller and Auditor-Generals if, at the outset of their term of office, they know who will give them advice on any appointment that they may take up on leaving office as well as the basis on which these decisions will be made. As such, I suggest that stipulating who will advise former C&AGs is preferable. Furthermore, the commission’s original proposals stated that former C&AGs would have to abide by the advice that they were given regarding their future employment. The Bill does not allow for that.

The Minister in his letter to me following the Second Reading debate stated that, if a former C&AG were to take up a position against advice received by the commission, the commission would be free to make that advice public. He drew the parallel with how advice is given to former Ministers and argued that that would be a strong deterrent against any former C&AGs going against that advice. However, former C&AGs do not have the same high profile as former Ministers; a former C&AG who ignored the advice of the commission would perhaps not attract as much attention or interest as a former Minister who did such a thing. Hence my Amendment 41A.

Amendment 42 would change the time limit on when former C&AGs may accept Crown employment. If former C&AGs were immediately able to accept a position that is in the gift of the Government, there would be a danger that some people could perceive such an appointment as being a reward for actions taken while in office. That would undermine the integrity of the C&AG and lead to his actions while in office being called into question through speculation about his future.

The Public Accounts Commission suggested in its 15th report that former C&AGs should be prohibited from ever accepting any post that the National Audit Office has audited or which was in the gift of the Government. That is a heavy penalty. The Government agree: the Bill prevents former C&AGs from providing services to the Crown or to a body that is required to open its accounts to audit by the National Audit Office for a period of just two years. However, while it is entirely understandable that we would not wish to put a restrictive life ban on former C&AGs, I suggest that two years may be too short a period. If we accept that the greatest risk is of attempts by the Executive to influence the C&AG, the sensible course would surely be for a time limit to be at least five years. In that time, there is the real prospect that the Government will have changed and that a former C&AG’s appointment would be considered as a Crown appointment by others. Such a time limit would mean that a C&AG would not be able to rely with any certainty on the incumbent Government still being in office at the time when he or she might accept some Crown appointment, which would overcome any suggestion of political influence on any decisions that a C&AG would take while in office. Amendment 42 would be the best guarantee that, between a C&AG leaving office and subsequently being appointed to a Crown position, there was likely to have been a general election.

The Bill is in the main a good Bill. It proposes to do some sensible things, but our task is to scrutinise, question and improve it. I suggest that the two amendments that I have tabled for your Lordships’ consideration will make some improvement to the Bill.

[Lord Eatwell]

I support Amendment 41A proposed by my noble friend Lord Touhig, albeit on a slightly different basis. Given that this appointment will now be for only one term of tenure, it is important that we attract people of the highest quality to the post. If they felt that their future career prospects were endangered, it is likely that we would not have the very best field from which to choose. Therefore, when someone comes to the end of their tenure, it is appropriate for them to receive advice from an established committee whose procedures and standards are well known and in the public domain, and whose approbation or approval of a particular post is seen as having undergone a strict assessment as to the impact on the integrity of the post and the individual. If we are to get the best applicants for this sort of job, we must give some certainty about the nature of their future careers. The involvement of an established body with agreed procedures and standards would help to provide that.

Interestingly enough, if my noble friend’s Amendment 41A were accepted, his Amendment 42 would be less important. The committee would have given its approval of the post and that would receive general acceptance. Therefore, the longer time period might not be so necessary. However, I defer to my noble friend, who has much more experience in these matters than I do. The Government should look carefully at Amendment 41A, which would improve both the Bill and the performance in this particular post.

--- Later in debate ---

[Lord Sassoon]

That is the intention behind the drafting but I shall see whether, on reflection, it achieves that. I think that we can accommodate the degree of certainty, albeit that, even in the period of appointment of a C&AG, the relevant advisory committee could change.

I turn to the question of abiding by the committee’s decisions. I hear what the noble Lord, Lord Touhig, says about this being different from ministerial appointments or other Senior Civil Service appointments, where similar conditions apply. However, as we have seen in recent years, there is, as there should be, a considerable focus on current and former Comptroller and Auditors-General. It is inconceivable that similar pressures to those that apply to Ministers and officials would not apply very directly in this case. Therefore, just as, so far as I am aware, it is not written into other Bills, I do not believe that there is a need to write into this Bill the necessity to abide by decisions. If it were thought appropriate to draw attention to this point, I believe it would be more applicable to the terms of appointment rather than the Bill.

On Amendment 42, I certainly agree with the noble Lord, Lord Eatwell, that we must make sure that we get the best field of candidates. If the matters that are the subject of Amendment 41A are addressed properly, which I believe in the total construct they are, then I believe that a period of two rather than five years strikes the right balance when considering the terms of the appointment. Again, it is difficult to say what the appropriate read-across should be, but two years is the period during which former Ministers go through clearance procedures, and this is a tighter requirement, as it should be.

In addition, there are potential difficulties concerning the legal enforcement of such a restriction. The issue here is whether, by specifying five years or some other relatively high number, we would risk infringing age discrimination legislation by making the appointment process exclude those who were getting closer to—I do not know what the term should be—perhaps our best years. Therefore, there are real concerns and there is clearly no easy answer to the question of what the right number might be, but the legal advice that the Government have received is that, as one pushed that number up—and five years would certainly lead to the legal advice being uncertain—there would be a significant risk that the restriction would be thought to be an infringement of age discrimination legislation. Therefore, subject to making it absolutely clear that Clause 15 works as intended—I think that it does, but I will look again—I believe that we have struck a proportionate balance which ensures that we get the best candidates for the job but does not in any way leave open a suggestion of impropriety afterwards.

[Lord Touhig]

I am grateful to my noble friend and to the Minister for their responses. I take the point that my noble friend Lord Eatwell made: if Amendment 41A were accepted, the necessity for Amendment 42 would perhaps not be as great. I also take his point—it was one reason that prompted me to draft this amendment—that the Bill simply says that,

“the person must consult such person as may be … specified”.

I hope the Minister will go back and look further at that, because there is some merit in specifying who will actually look at these matters; indeed, in 2008 the Public Accounts Commission recommended that it should be the Advisory Committee on Business Appointments. The advisory committee was formerly chaired by the noble and learned Lord, Lord Mayhew, and is presently chaired by the noble Lord, Lord Lang of Monkton, so it has a distinguished chairman and a distinguished membership. The committee’s website says:

“The Advisory Committee on Business Appointments is an independent body which provides advice to the Prime Minister, the Foreign Secretary, or other Ministers if requested, on applications from the most senior Crown servants who wish to take up outside appointments within 2 years of leaving Crown service”.

I rather think that it will not be abolished in a hurry, because we will always need such a body to give advice to Prime Ministers and to others on these matters.

I am certainly encouraged that the Minister says that he will perhaps go back and further reflect on this. He mentioned his concern that Amendment 42 might have an impact on age discrimination. As someone who celebrated his 63rd birthday on Sunday—I am still flattered, as a new Member of your Lordships’ House, when colleagues come up to me and ask, “Are you settling in, young man?”—I take the Minister’s point as a fair one. Having said that, I await the Minister’s further reflection and coming back to us, and I beg leave to withdraw the amendment.

Amendment 41A withdrawn.