Public Audit (Wales) Bill [Lords]

Public Bill Committee, 29 June 2004.

Standing Committee D

Public Audit (Wales) Bill [Lords]

Don Touhig (Labour/Co-operative, Islwyn)

I beg to move,

That the Public Audit (Wales) Bill [Lords] be considered in the following order: Clauses 1 to 50, Schedule 1, Clauses 51 to 66, Schedule 2, Clauses 67 and 68, Schedule 3, Clauses 69 to 72, Schedule 4, Clauses 73 to 75, New Clauses, New Schedules, remaining proceedings on the Bill.

We have had a meeting of the Programming Sub-Committee, and it agreed to the motion. I am pleased that you are in the Chair, Mr. Griffiths; I have been fortunate enough in my time as a Minister to serve on several Committees that you have chaired. Some have considered important legislation for Wales, and your knowledge and insight about Wales, as a Welsh MP and former Welsh Office Minister, have been invaluable. We are fortunate that you are chairing the Committee, because your help, advice, humour and patience will greatly aid our scrutiny of this important legislation. I have no doubt that we will make good progress in debating the Bill, and we will look to you for guidance and help to get through it as expeditiously as possible.

Bill Wiggin (Conservative, Leominster)

I echo the Minister's kind comments, because he is absolutely right. I hope that he will continue to be kind and generous with his comments throughout our debates. His important point was about what a tremendous Chairman we have in you, Mr. Griffiths, and how lucky we have been to have you chairing our debates not only on various pieces of Welsh legislation, but in the Welsh Grand Committee, where you have guided us wisely. We are delighted to have you with us this morning.

Roger Williams (Liberal Democrat, Brecon and Radnorshire)

Good morning, Mr. Griffiths. Thank you for chairing this Standing Committee, and as previous speakers have said, we look forward to your guidance. As Wales is such a busy place, some of us will be darting back and forth between this Committee and the Welsh Affairs Committee, so I offer my apologies for that.

Question put and agreed to.

Win Griffiths (Labour, Bridgend)

Before we start debating the Bill, I remind the Committee that there is a money resolution in connection with the Bill, and copies of the resolution are available in the Room. I also remind Members that adequate notice should be given of any amendments. As a general rule, I do not intend to call starred

amendments, including starred amendments that may be reached during an afternoon sitting of the Committee.

Clause 1 - Transfer of functions of Assembly

Bill Wiggin (Conservative, Leominster)

I beg to move amendment No. 1, in page 1, line 7, leave out from 'may' to second 'the' and insert 'after consultation with'.

Win Griffiths (Labour, Bridgend)

With this it will be convenient to discuss the following:

Amendment No. 2, in clause 1, page 1, line 15, leave out paragraph (a).

Bill Wiggin (Conservative, Leominster)

Amendment No. 1 is a probing amendment to clarify the relationship between the Auditor General and the Assembly, and what would happen if the Auditor General did not agree with the Assembly. I seek an assurance from the Minister that the procedure in the event of a disagreement is robust. The wording that the Assembly should seek the consent of the Auditor General implies that the Auditor General is superior and has the power to refuse consent. The amendment is designed to find out whether that is the intention. We believe that the word ''consultation'' allows for a more open procedure on a more equal footing, meaning that disagreements would not cause any problems.

Amendment No. 2 would leave out subsection (2)(a), because its definition of the public body as

''exercising functions of a public nature''

is too imprecise. We are concerned that the definition could include a private sector company performing public works as a contractor, such as a road builder. Does paragraph (a) mean that the Auditor General could look into the affairs of private companies? There are many small organisations funded substantially through commercial contracts with the public sector, but there is no exemption for them. It is important that public money is properly audited, but I am concerned that small enterprises substantially funded in that way could fall under the provision.

Don Touhig (Labour/Co-operative, Islwyn)

The clause requires that the Assembly obtain the consent of the Auditor General before making an order. Amendment No. 1 would remove the requirement to obtain the Auditor General's consent before the Assembly could make an order enabling him to exercise certain of the Assembly's supervisory functions. The amendment provides for consultation with the Auditor General, but falls short of seeking his or her consent. It could mean, therefore, that the Assembly could impose the exercise of functions on the Auditor General. That would be unacceptable, and I will explain why.

The consent of the Auditor General to any exercise of the Assembly's functions provided for by the clause is vital, because the Auditor General is a Crown appointment. As the statutory auditor of the Assembly, it is important that his independence is not called into question. That is the main reason why we will resist the amendment. The Auditor General must

be satisfied that in taking on any such functions his independence is not compromised. Objectivity and independence are the two key principles underlying the auditor's work. They are promoted by the auditing practices board and observed by the Auditor General. The requirement for his consent in clause 1 ensures that those safeguards are maintained.

A further safeguard is that any order made under the clause, whether transferring supervisory functions on a once-and-for-all basis or asking the Auditor General to exercise them on the Assembly's behalf, would be subject to scrutiny under the National Assembly's subordinate legislation procedures. Those of us who have served on Committees dealing with Welsh legislation—as the hon. Member for Leominster (Mr. Wiggin) has—will recognise that the Assembly has rigorous public scrutiny of such matters.

The basic objective of the provision is to reduce bureaucracy where possible. Discussions between the Auditor General and the Assembly on the issue need not be confrontational, and I hope that they would not be. The Assembly would readily accept the fact that the Auditor General might consider it inappropriate to take on a particular function.

Amendment No. 2 would restrict the Assembly's ability to transfer supervisory functions to the Auditor General or to have him exercise such functions on the Assembly's behalf. The effect would be that the Assembly could not exercise that power in respect of a body that exercises functions of a public nature but is not entirely or substantially funded from public money. That is an unnecessary restriction and could be counter-productive. A body exercising functions of a public nature may not be entirely funded from public money, nor need it necessarily be construed as being substantially funded from public money. It may earn income from fees and charges.

I shall give some examples to assist the Committee. If such a body is a regulatory body, it may derive a significant proportion of its income from inspection or registration fees. Two examples of that would be the Care Council for Wales and the General Teaching Council for Wales. The reasons why the Assembly may wish to transfer its supervisory functions—or to have them exercised by the Auditor General—may be valid irrespective of whether a body is wholly or partly financed from public funds.

The definition of a ''public body'' in the clause is consistent with the definition used in the Government Resources and Accounts Act 2000. If there was doubt about whether a body was ''substantially'' funded from public money, it might still be covered under the first heading of the definition as a body exercising functions of a public nature. The alternatives—to define ''substantial'' in terms of a cash or percentage threshold—could result in anomalies. The Assembly could make such an order only in relation to the supervisory functions that it already has, so the regulatory burden on bodies that fall within the definition would not be increased.

The hon. Member for Leominster asked whether the definition of a public body in the clause could cover private companies. The Auditor General would not

exercise functions in respect of a private contractor; those would be carried out under the terms and conditions of the contract, and not by the statutory supervisory responsibility of the Auditor General. I hope that my explanation has been helpful, and I invite the hon. Gentleman to withdraw his amendment.

Hywel Williams (Plaid Cymru, Caernarfon)

It is vital that the Auditor General's independence is not compromised. It is also vital that he should be satisfied that, in assuming his functions, his independence is not compromised. The requirement for his consent in clause 1 is a safeguard in that respect, and we support the Minister's request for the amendment to be withdrawn.

Bill Wiggin (Conservative, Leominster)

If we are going to get through all the amendments at this speed, I shall be happy, and I am delighted that the Minister's answers were so helpful. Unusual though it may be for me to be batting for equality with the Assembly, I am delighted that the Crown appointment is a superior appointment, so the Auditor General must give consent and consultation is not necessary. I am extremely grateful to the Minister for clarifying the nature of a publicly funded or substantially publicly funded public body, and for ruling out the possibility of private companies being within the remit. Having been satisfied on my two key concerns, I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 1 ordered to stand part of the Bill.

Clause 2 - Additional functions of Auditor General

Bill Wiggin (Conservative, Leominster)

I beg to move amendment No. 4, in page 2, line 41, leave out from 'must' to end of line.

Win Griffiths (Labour, Bridgend)

With this we may discuss the following amendments: No. 5, in clause 2, page 3, leave out lines 33 to 39.

No. 6, in clause 2, page 3, line 39, at end insert—

'(3A) Arrangements may not be made under subsections (1) or (3) unless the Auditor General for Wales has satisfied himself that the independence of any audit carried out by him or by a person appointed by him is not impaired by the arrangements.'.

Bill Wiggin (Conservative, Leominster)

Amendment No. 4 would delete the words

''if so required by a relevant body''

from proposed new section 96B(1) of the Government of Wales Act 1998, which clause 2 inserts, because they imply that certification is optional. Certification is an important process, which should be an integral part of the Auditor General's duty, but the Bill allows a relevant body to request the Auditor General to certify. We are concerned that the clause allows bodies to shop around for certification of their claims, which is an undesirable practice.

Amendment No. 5 would leave out new section 96C(3) as inserted by clause 2. It is a probing amendment to find out what arrangements will be made between the Auditor General and the three types

of organisation set out in the subsection—a ''relevant authority'', a ''qualified auditor'' and an ''accountancy body''. What arrangements might be made with each type of organisation, and will the Minister confirm which bodies are covered by subsections (1) and (3)?

Amendment No. 6 deals with the Auditor General's independence. Our suggested new subsection would ensure that his independence was not impaired by arrangements that he made with the various bodies for the various purposes in subsections (1) to (3). Maintaining the same standards of auditor independence in the public sector as exist in the private sector is vital. The amendment would give the Auditor General a clear obligation to satisfy himself that the arrangements entered into did not weaken his independence. That statutory requirement would provide firm roots for both actual and perceived independence.

In Committee in the other place, Lord Davies argued that the Government do not believe that a statutory duty is necessary to ensure that the Auditor General upholds the highest standard of independence. As the proposed duty would support what will be the outcome anyway, the amendment would do no harm. In fact, it would strengthen high-quality public audit to have the same firm guidelines and protocols as the private sector has.

Don Touhig (Labour/Co-operative, Islwyn)

The provision in clause 2 that inserts new section 96B into the 1998 Act is intended to make it clear that the Auditor General is required, on request, to make arrangements for the certification of claims and returns or accounts relating to public bodies for which he has a statutory audit responsibility. At present, there is a mandatory requirement for certification, about which the hon. Member for Leominster has sought reassurance. However, bodies have discretion in respect of the people whom they ask to carry out the certification. In practice, the great majority of bodies ask their appointed auditor or a statutory auditor to undertake such work.

The strong likelihood is that public bodies covered by new section 96B will request the Auditor General to arrange certification work under the arrangements in the Bill. The clause gives them the security of knowing that if they ask him to make arrangements he must comply—for instance, if they are having difficulty in obtaining certification services from another source.

Giving the Auditor General a monopoly of such certifications would not be appropriate. Retaining a measure of discretion, as proposed new section 96B would, gives bodies an element of choice—the in word of the moment—in certifying work, and could alleviate the work pressures that the Auditor General's office might face.

The key safeguard is that any shortcomings in certification work arising from the use of an auditor other than the Auditor General, or one with whom he makes arrangements, would be identified during the statutory audit of that body's accounts by the Auditor General, or, in the case of local government, by the

appointed auditor. Claims and returns in respect of European Community grant schemes are examples of such certification work.

Amendment No. 4 would also require the Auditor General to make arrangements for the certification of claims, returns or accounts relating to bodies for which he has no statutory audit responsibility. The fact that he would be required to perform those functions irrespective of his wider audit relationship with a body could result in his undertaking such work in a vacuum, without any background knowledge of what he is to certify, for whom and why.

Amendment No. 5 could prevent the Auditor General from making arrangements with other regulatory and audit bodies for co-operation and mutual assistance that would be beneficial to the exercise of their respective functions. It could also hamper his ability to participate in joint working and co-operation. Hon. Members will be aware that the Welsh Affairs Committee endorsed the objective of wide powers of co-operation.

The Committee also welcomed the case for a public mechanism to ensure that the benefits of the growing diversity of provisions among the nations of the UK are realised. The clause furthers that aim. A key principle of the Bill is to ensure that there is greater collaborative working through joint reviews, and strategic forward planning between audit and regulatory bodies—including bodies from elsewhere in the UK, such as Audit Scotland—and from outside the UK. Increased collaborative working would also reduce the administrative burden on client organisations.

Examples of work that could be undertaken under the provision are as follows: joint review work between the Auditor General on an England and Wales basis, or a wider UK or international basis; the secondment of staff between the proposed Wales Audit Office and other bodies covered by the clause for training or specific work-related reasons; the provision of specific expertise by one body to another, such as specialist forensic accounting services and the interrogation of complex databases; and international co-operation in developing audit standards and financial accountability, which would be valuable because risk management structures may also affect European audit bodies.

I mentioned in my opening speech on Second Reading that the Auditor General and his staff would have much to contribute. The Auditor General, by virtue of his office, may have implied power to enter into arrangements, but without the provision, each of the categories of body referred to would have to consider whether its powers were sufficiently wide to enable it to enter into such an arrangement. The key objective of the clause is to make clear the powers of all prospective parties to enter into such arrangements. International audit offices equivalent to the Auditor General for Wales would be covered by the definition of ''relevant authority'' in the clause.

Amendment No. 6 would require the Auditor General to satisfy himself that his independence in conducting audits was not impaired as a result of his

entering into co-operative arrangements, including arrangements with the National Assembly. We touched on the imperative for the Auditor General to maintain his independence, and he already abides by the auditing practices board's guidance on standards of independence. Objectivity and independence are two of the key ethical principles that govern auditors' professional responsibilities.

The independence of public sector auditors from the organisation that is being audited is also a fundamental principle adopted by the Public Audit Forum, which comprises the principal audit bodies for the four home nations. The auditing practices board is in advanced stages of discussion with the national audit agencies, which include the Auditor General for Wales, on the adoption of ethical standards that the board proposes to introduce later this year.

Agreement is a matter for the audit agencies and the board, but the Government believe that it is appropriate for common standards to apply across the audit profession and we would welcome such an agreement. I am confident that agreement can be reached and that standards will be adopted, particularly given the Auditor General's adherence to the existing auditing practices board guidance.

The Auditor General also has in place local protocols that ensure independence and guard against conflicts of interest arising. For example, in the case of the secondment of national audit staff to a client organisation, those members of staff, on returning to the National Audit Office, do not perform any audit functions in respect of that body for three years. It will be open to the Auditor General to reconsider existing arrangements, strengthening them if he considers it necessary. For that reason, I do not believe that a statutory duty is necessary to ensure that the Auditor General upholds the highest standards of independence.

The hon. Member for Leominster asked what is covered by subsections (1) and (3). A relevant authority can mean a Department, a local authority, an Assembly-sponsored public body or the holder of a public office such as the Children's Commissioner.

In respect of amendment No. 4 and clause 2, the hon. Gentleman asked about the implication that certification is optional and what arrangements are to be made with other bodies to avoid that. The provision does not affect whether the body in question must seek certification in particular circumstances; it simply means that where that body requires the Auditor General to do the certification work, he must do so. The provision is equivalent to the position under the Audit Commission Act 1998 that applies in England and Wales. When making grants and so on, the Assembly and its sponsored bodies would include specific provision in grant conditions to ensure that certification is done by the Auditor General.

Given that clarification, I hope that the hon. Gentleman will ask leave to withdraw the amendment.

Bill Wiggin (Conservative, Leominster)

I have been most remiss in not thanking colleagues in another place, especially Lord Roberts of Conwy and Baroness Noakes, both of whom did a fantastic job in scrutinising the Bill. Even if I did not like the Minister's response, I am reminded of the Greeks at Thermopylae in that numbers on the Opposition side of the Committee are reduced compared with the hordes on the Government side. I looked around for potential allies, but the Liberal Democrats are not present. According to the Flint and Holywell Chronicle, that is because they have already won:

''Delyn Liberal Democrats are celebrating victory over controversial plans to gag Welsh whistle-blowers. The Government is to shelve plans to fine or imprison ''whistle-blowing'' Welsh auditors who leak information about improper behaviour by local authorities. Liberal Democrat peers, MPs and Ams, with support from other opposition parties, vigorously fought the proposal contained in the Public Audit (Wales) Bill now before Parliament.''

However, the Liberal Democrats are not here. The quote continues:

''Now the Government has relented and plans to drop the proposals. During a House of Commons debate, Liberal MP Lembit Opik acknowledged the part played by Delyn Lib Dems in opposing the gagging of whistle-blowers. Delyn Lib Dem vice-chairman Cllr Robin Baker has welcomed the Government climbdown and says the decision reaffirmed his belief in the democratic process in Wales and the UK as a whole.''

[Interruption.] I can see that Labour Members are delighted with that recognition.

Win Griffiths (Labour, Bridgend)

Order. I am waiting to see which of the hon. Gentleman's amendments this relates to.

Bill Wiggin (Conservative, Leominster)

Amendment No. 4. I am grateful for your sharp intervention, Mr. Griffiths. I shall stop tormenting the absent Liberal Democrats about their hypocrisy; as they are not here to fight back, perhaps your plea for clemency should be borne in mind.

The important point is that it is clear from the Minister's reply that certification is not questioned in the way that it could have been. It allows bodies to shop around, but the important point that he made is that the Auditor General must not certify bodies with which he has no link. I am grateful for that reply. The idea that he would have too much work is not one that I take on board, although he should not be working in a vacuum, as the Minister described it. I am also grateful to him for describing the local protocols, and I am happy that that answers some of my concerns about amendment No. 5.

Turning to amendment No. 6, which would ensure that arrangements

''may not be made under subsections (1) or (3) unless the Auditor General for Wales has satisfied himself that the independence of any audit carried out by him or by a person appointed by him is not impaired by the arrangements'',

obviously the Auditor General must be satisfied that his independence is maintained. From the comments that are now on the record, any doubts about that will be allayed.

I am grateful to the Minister for his replies, although I am not particularly grateful to the Liberal Democrats for not turning up, but as one can tell from their press releases, they think that they have already done their

job. I am sure that the electorate will hold them to account at the next election. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 2 ordered to stand part of the Bill.

Clause 3 - Studies for improving economy etc in services

Bill Wiggin (Conservative, Leominster)

I beg to move amendment No. 7, in clause 3, page 4, leave out lines 25 and 26.

Subsection (3) prevents the Auditor General from questioning the merits of the policy objectives of a body as he studies value for money. If in the course of his studies, the Auditor General discovers a body's objectives to be causing inefficiency and ineffectiveness, he should report and question its policy. However, subsection (3) discourages him from making such comments. The amendment would ensure that he is not constrained in his work by policy considerations.

Hywel Williams (Plaid Cymru, Caernarfon)

From the Government's standpoint, it may well be beneficial for the Auditor General not to question the merits of policy objectives. In practice, however, I do not see how that can be avoided if in the course of his work he discovers that a body's objectives do not contribute to efficiency or effectiveness.

That by no means confirms that the amendment is correct, but one point concerns me and my party—the relationship between the Audit Committee of the National Assembly, and the Government and the Auditor General. There is a good working relationship, which, in the Assembly, is based on the Audit Committee being precluded from scrutinising the policy implications of its reports. That, in respect of the clause, fits in with the role of the Auditor General.

Don Touhig (Labour/Co-operative, Islwyn)

We have had a short but important debate that perhaps goes to one of the big issues that have faced auditing and public inspection these past years. Amendment No. 7 would delete the prohibition on the Auditor General being able to question the merits of policy objectives of any relevant body while undertaking or promoting comparative cost-cutting studies on economy, efficiency and effectiveness—or, as most of us know it, value for money.

It is a long-standing principle that the Auditor General, and similarly the Comptroller and Auditor General in England, cannot question the policy objectives of a body for which he has audit responsibilities. That does not prevent him from expressing a view on how the body set about achieving its objectives and whether its approach represents value for money. He may also, as the clause seeks to promote, inform future strategic policy development. We touched on that on Second Reading.

However, questioning the merits of policy could compromise the Auditor General's independence if, for instance, he undertook audit work or a ''value for money'' study relating to a policy area on which he had previously expressed a view. That would not be conducive to the exercise of his functions, and we fear that it might be seen as a blight on his independence.

The amendment would also raise an inconsistency between the Auditor General's powers in respect of cross-cutting studies provided for under the clause, and studies in respect of the Assembly and Assembly-funded bodies undertaken under the Government of Wales Act 1998, where the prohibition on questioning policy merits would still apply. For those reasons, we believe it would be inappropriate for the Auditor General to question the merits of policy objectives when exercising his functions.

Bill Wiggin (Conservative, Leominster)

I am particularly keen to intervene on the Minister because I do not want him to finish before having the chance to consider this. We all recognise the importance of an expert being able to comment, but quite a harsh turn of phrase is used to prevent the Auditor General from commenting. Surely, in the interests of effectiveness and efficiency, he ought at least to be able to say something that would be helpful. I am prepared to recognise that simply deleting the wording is not the best solution, but might not some modification be possible to enable him to make a constructive input without impinging on his independence?

Don Touhig (Labour/Co-operative, Islwyn)

The hon. Gentleman makes a perfectly valid point. In my initial comments, I sought to point out that the Auditor General has the ability to question the merits of policy and how an operation is being worked. He may express a view on how a body sets about exercising its objective and whether its approach represents value for money. We are at one on that. I will take the hon. Gentleman's point on board and reflect further on the wording, although I do not know whether it will be possible or appropriate to make any changes.

The hon. Member for Caernarfon (Hywel Williams) makes an important point. I am aware of the good relationship in the National Assembly in respect of the work of the Audit Committee. Again, I will broadly reflect on the provisions of the clause. If the Government feel that there is anything that we could or should do to take account of the points made by both hon. Gentlemen, we will perhaps reconsider at a later stage.

Bill Wiggin (Conservative, Leominster)

I am grateful to the Minister for those comments. I know now that the Official Report of this Committee plays a part in any legal questioning. His answer enables us to withdraw the amendment because we now know that should the Auditor General wish to make a comment he can do so. That was the

purpose behind the amendment. I am happy with the Minister's reply and I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Question proposed, That the clause stand part of the Bill.

Hywel Williams (Plaid Cymru, Caernarfon)

May I draw the Committee's attention to the need to keep the Assembly's Audit Committee informed of and involved in these studies? I note the Minister's confirmation that he will take this point into account. Section 145 of the Government of Wales Act states that the views of the Audit Committee should be taken into account, yet there is no such statement in proposed new section 145A. However, I take his point that the importance of the Audit Committee will be borne in mind.

Don Touhig (Labour/Co-operative, Islwyn)

The hon. Gentleman is right. Sections 100 and 145 of the Government of Wales Act enable the Auditor General to undertake value-for-money studies in respect of the National Assembly or its sponsored bodies. When undertaking such studies, the Auditor General must take account of the views of the National Assembly's Audit Committee.

Clause 3 adds proposed new section 145A to the Government of Wales Act, which enables the Auditor General to undertake forward-looking cross-sectional value-for-money studies. The clause does not specifically state that the Auditor General will take account of the Audit Committee's views, although, in practice, I believe he would. As I said earlier, I will take account of what the hon. Gentleman says, and if there is anything we ought to do to make that point clearer, we will consider it.

Question put and agreed to.

Clause 3 ordered to stand part of the Bill.

Clause 4 - Studies at request of educational bodies

Bill Wiggin (Conservative, Leominster)

I beg to move amendment No. 9, in page 5, line 12, leave out from 'Table' to end of line 14.

Win Griffiths (Labour, Bridgend)

With this it will be convenient to discuss the following amendments:

No. 10, in clause 4, page 5, line 14, at end insert

'or if he considers it appropriate to do so'.

No. 12, in clause 4, page 5, line 42, at end insert—

'(aa) be appointed to audit their accounts;'.

No. 13, in clause 4, page 6, line 3, at end insert—

'(c) provided that any such member of staff is eligible for appointment within the terms of section 14'.

No. 11, in clause 4, page 6, leave out lines 12 and 13.

Bill Wiggin (Conservative, Leominster)

The amendments relate to value-for-money studies of educational bodies and the audit aspect of clause 4. We welcome value-for-money studies being carried out by the Auditor General in educational bodies, but they can be carried out only at the request of the educational body. That places

educational bodies in a position totally different from that of the bodies covered by clause 3, which the Auditor General can study at will. Why is there special treatment for educational institutions?

Amendments Nos. 9 and 10 would remove the need for consent. Amendment No. 10 offers an alternative to amendment No. 9 by adding at the end of line 14

''or if he considers it appropriate to do so.''

That would give the Auditor General back his power to initiate studies rather than rely solely on the consent of educational bodies. We do not believe that the initiative for studies should be left to the bodies themselves. Amendments Nos. 9 and 10 are probing amendments designed to ask the Minister to explain why these bodies are allowed to request value-for-money studies. They receive large amounts of public money, so it is important that the value for money of those funds is studied.

Amendment No. 11 is a probing amendment to discover whether the clause is drafted to be consistent with past legislation relating to educational bodies, and I hope that the Minister will explain subsection (7). If we simply allowed educational bodies to request to be studied, it would not be surprising if they did not choose to volunteer for scrutiny if there was any doubt whether all was well. The Auditor General's powers to study relevant bodies in clause 3 should apply to educational bodies. He should not have to depend on bodies requesting him to initiate studies. The Bill puts education authorities in a more protected position, so in that area the Bill fails to provide strong provision for public audit in Wales.

Amendments Nos. 12 and 13 concern the audit aspect of clause 4. In proposed section 145B(5), the Auditor General can advise higher and further education corporations on the appointment of auditors, or arrange for a member of his staff to be appointed auditor, but he himself cannot be appointed auditor. Amendment No. 12 would rectify that omission. Proposed new subsection (5) would allow the Auditor General to appoint a member of his staff as auditor to a higher or further education establishment. Amendment No. 13 merely seeks to ensure that the member of staff is qualified properly, in line with the qualification specified in clause 14.

We worry about the coherence of the Bill. Baroness Noakes described it in another place as

''a patchwork of different provisions culled from here, there and everywhere.''—[Official Report, House of Lords, 23 February 2004; Vol. 658, c. GC25.]

I hope that the Minister will take the opportunity to consider the amendments, which would ensure that the Bill did not prescribe different standards.

Don Touhig (Labour/Co-operative, Islwyn)

Amendments Nos. 9 and 10 would enable the Auditor General to undertake value-for-money studies of individual educational bodies in Wales, irrespective of whether they had been requested. You will recall, Mr. Griffiths, the case of a college in Gwent for which Members of Parliament played a significant role in getting an audit and investigation, and I have background knowledge of how such arrangements work in practice.

The intention of clause 4 is to enable the Auditor General to undertake studies of bodies, such as higher or further education colleges, at the request of the governing body or the funding agency. The relevant funding agencies in Wales are the National Council for Education and Training for Wales and the Higher Education Funding Council. The Audit Commission currently has the power in respect of England and Wales under the Audit Commission Act 1998.

It is appropriate that such studies should be undertaken only on request. The Auditor General is not the statutory auditor of such education bodies; they are responsible for the appointment of their own auditors—that is the distinction. However, the amendments would give the Auditor General complete discretion to undertake such studies, irrespective of whether they were requested, and of the fact that he would have no wider statutory audit functions in respect of those bodies.

The Auditor General already has the ability under section 145 of the Government of Wales Act 1998 to undertake economy, efficiency and effectiveness studies in the higher and further education sectors, which can touch on and compare the practices of individual institutions in using resources.

The National Council for Education and Training for Wales and the Higher Education Funding Council, to which I have referred, are Assembly-sponsored bodies, and the Auditor General for Wales is their statutory auditor. On publication of the draft Bill for consultation in April last year, the Assembly undertook that if at some point in the future it were to propose to incorporate further or higher education corporations as a category within the Auditor General's remit, such a proposal would be subject to a separate consultation exercise—an important safeguard. It would be preferable to deal with such bodies as a class rather than on a piecemeal basis.

Any future exercise could take account of arrangements for both financial audit and value-for-money audit through economy, efficiency and effectiveness studies. Nothing in proposed new section 145B(5) of the Government of Wales Act prevents the Auditor General and an education body from renewing an audit arrangement for a further financial year. It would be incongruous and would lead to confusion over the respective roles of the Auditor General and an educational institution's own auditor if the former could undertake unsolicited value-for-money studies.

Amendment No. 12 would enable the Auditor General to be appointed as the statutory auditor of an education corporation on a permanent basis. Clause 4 will add a new section 145B(5) to the Government of Wales Act to enable the Auditor General, at the request of a higher or further education corporation, both to advise them in connection with the appointment of persons to audit their accounts and to arrange for their accounts for a financial year to be audited by one or more members of his staff, appointed by the corporation.

If a corporation were experiencing difficulties, for whatever reason, in acquiring audit, they could call on the Auditor General for assistance. I have already referred to the National Assembly's undertaking to consult on any future proposal to incorporate further and higher education corporations as a class within the Auditor General's remit. Any such proposal would take account of both financial audit and value-for-money work.

Against that background, the amendment would create an unnecessarily piecemeal approach to the financial audit of higher and further education corporations and would run counter to the National Assembly's commitment to consult on any future proposed change to the audit arrangement for such bodies. In conjunction with section 144 of the Government of Wales Act, clause 63 would enable further and higher education institutions to be added to the Auditor General's remit at some point in the future.

Amendment No. 13 would require that any member of staff appointed to audit the accounts of an education corporation by the Auditor General must be eligible for appointment under clause 14. However, that clause relates specifically to the appointment of auditors by the Auditor General for local government bodies. Higher and further education corporations do not fall within the category of local government bodies—something that the Conservatives changed when they were in government.

The provision in clause 4(5) that would enable the Auditor General to arrange for one or more members of his staff to audit a corporation's accounts—subject to appointment by a corporation—is consistent with clause 9, which provides for any function of the Auditor General to be exercised by a member of his staff if authorised by him, without any further caveat. In practice, the Auditor General would satisfy himself that any member of his staff would be suitably qualified to undertake the work. Auditors would have an appropriate qualification awarded by one of the bodies within the consultative committee of accountancy bodies.

Amendment No. 11 would delete the reference to construing clause 4 as one with other education legislation. The provision is essentially one of clarification and is common to education legislation. It enables definitions in other education legislation to be relied upon to clarify meaning. For instance, if there were uncertainty about whether an educational establishment were a higher education institution for the purpose of value-for-money studies, under the provision in clause 4, the definition of such an institution in the Further and Higher Education Act 1992—and the way in which the courts have interpreted that Act—would be relied upon for clarification.

The hon. Gentleman referred in particular to amendments Nos. 9 and 10, and I want to touch on one or two points that he made. As I have said, if educational bodies in Wales are brought into the Auditor General's statutory audit responsibilities in future, clause 3 would apply to those bodies, and he

would be able to conduct a forward-looking value-for-money study of that body at his own discretion. The clause offers a degree of flexibility: it allows for future change, if the Assembly were to decide that change was necessary to allow the Auditor General to extend his remit within further and higher education. On that basis, although this has been a short debate, I invite the hon. Gentleman to withdraw his amendment.

Bill Wiggin (Conservative, Leominster)

I am grateful to the Minister for that reply. He was doing better before, but he is still on song. I do not feel quite as comfortable as I did earlier, although the points that he made after receiving a note do help somewhat. We have had a chance to air our worries, and that is about as constructive as we can hope to be, so I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 4 ordered to stand part of the Bill.

Clause 5 - Studies relating to registered social landlords

Bill Wiggin (Conservative, Leominster)

I beg to move amendment No. 14, in page 6, line 18, leave out from 'The' to 'one' and insert

'Auditor General for Wales may carry out'.

Win Griffiths (Labour, Bridgend)

With this it will be convenient to discuss the following amendments:

No. 15, in clause 5, page 6, leave out lines 23 to 28 and insert—

'(2) The Auditor General for Wales may also carry out one or more programmes of studies as are mentioned in subsection (1) at the request of the Assembly provided that the Assembly agrees to make good the full cost incurred by him in undertaking the programme.'.

No. 16, in clause 5, page 6, line 24, leave out from 'him' to the end of line 25.

No. 8, in clause 5, page 6, leave out lines 29 to 31.

No. 17, in clause 5, page 6, leave out lines 37 to 41.

No. 18, in clause 5, page 6, line 41, at end insert

'and to an additional fine not exceeding £20 for each day on which the offence continues after he has been convicted of it.'.

No. 19, in clause 5, page 6, line 41, at end insert—

'(7A) If a person is convicted of an offence under subsection (6) the Auditor General for Wales may recover from that person any expenses incurred by him in connection with proceedings for the offence.'.

Bill Wiggin (Conservative, Leominster)

This is the largest group of amendments. Amendment Nos. 14 and 15 would ensure that the Auditor General could determine what studies he carried out on registered social landlords. As clause 5 stands, he is restricted to carrying out the studies that the Assembly wants, but we believe that he should determine his studies, as well as those where the Assembly has a concern. That is consistent with what we were questioning at the beginning of this morning's sitting: we want to ensure that no political imperative of the Assembly would influence his work, which would be totally inappropriate.

Amendment no. 16 would delete the words ''on his behalf'' from subsection (2) of new clause 145C, in order to find out who would carry out studies on the

Auditor General's behalf, and under what power they would be appointed. The Auditor General should have complete independence in deciding what to examine. However, the Bill is not constructed in a way that would make financial audit and value-for-money audit of public money in Wales consistent and coherent. The Bill should be—although it is not—built on the principle of effective audit of public money in Wales.

Amendment No. 8 would delete subsection (4), which deals with value-for-money audits of registered social landlords are similar to those under subsection (3) of clause 4. If, while carrying out his studies, the Auditor General discovers that a body's objective is causing inefficiency or ineffectiveness, he should be able to question and report on its policy. Amendment No. 8 would ensure that he was free to do his work without being constrained by policy considerations.

Amendments Nos. 17 to 19 are designed to make the powers against non-compliance consistent throughout the public audit regime in Wales. Amendment No. 17 would remove subsections (6) and (7) from proposed new section 145C of the Government of Wales Act inserted by the clause, which would make it a criminal offence not to comply with the requirements concerning access to documents. That offence is punishable by a level 3 fine. That is not consistent with compliance under clause 11, which covers the Auditor General's rights of access to general information. That is why we tabled amendment No. 20, which we shall discuss later, and which, for consistency, would include such criminal offences in clause 11.

At present, the Bill states that it is a criminal offence if registered social landlords or local government are involved in non-compliance, but not otherwise. Can the Minister explain the logic behind that? Amendments Nos. 18 and 19 would also bring consistency into how the penalties are calculated, as they repeat the extended fining provisions of clauses 19 and 53.

We are striving to ensure that there is internal consistency in the Welsh public audit regime. We do not believe that criminal sanctions are necessary and would like assurances from the Minister that they are required. I have no doubt that the Minister will reply that the criminal sanctions in clause 5 must be retained because they are consistent with criminal law in England. However, the Assembly already has the power and, in clause 39, is given the ability to create criminal offences. Therefore, the basis of the Minister's probable reply—that the amendments would create inconsistency in criminal law between England and Wales—is false because, as soon as the Assembly uses its power under clause 39, that consistency will be lost.

If the Government concentrated on making the Bill consistent, Wales would have a far more logical audit regime. However, it seems that the Government do not want to change what already exists in England, and consequently are creating layers of complexity for Wales.

Don Touhig (Labour/Co-operative, Islwyn)

This is the largest group of amendments, and I am sure that the debate on them will last for several hours. Perhaps not—[Laughter.] Colleagues did ask for some humour—I tried.

Amendments Nos. 14 and 15 should be considered together. They would enable the Auditor General to undertake programmes of study in respect of registered social landlords in Wales at his discretion and independently of agreement with the Assembly. That is irrespective of the fact that he does not have a statutory audit function for registered social landlords. Hon. Members may already have seen the letter that I wrote to one of the Conservative members of the Committee after Second Reading.

Bill Wiggin (Conservative, Leominster)

My hon. Friend the Member for Bridgwater (Mr. Liddell-Grainger).

Don Touhig (Labour/Co-operative, Islwyn)

Yes, the hon. Member for Bridgwater. That letter might help to clarify some of those points.

There are good reasons why agreement between the National Assembly and the Auditor General is the most effective way of progressing value-for-money studies in the sector. There are more than 100 registered social landlords in Wales. The Assembly provides £50 million a year in social housing grant to the sector. About 75 per cent. of registered social landlords do not at any one time receive funding from the National Assembly in respect of new building development. They meet their administration costs, including maintenance costs, from rental income and other sources, independently of the Assembly. The differing financial relationship of RSLs in relation to the Assembly should be taken into account in planning the participation in such value-for-money studies.

The Assembly has statutory responsibilities to fund and regulate the registered social landlord sector in Wales, which mirror those of the Housing Corporation in England. In particular, it must ensure that RSLs in Wales are financially viable, properly governed and properly managed. The exercise of those responsibilities includes the determination of standards of performance, the issue of guidance with respect to the management of housing, the approval of the constitutions and rules of RSLs and powers of intervention to ensure that regulatory requirements are complied with.

That work can inform positively the direction and emphasis of the programme of studies that can be agreed between the Auditor General and the Assembly. The programme agreed would complement and inform the Assembly's statutory responsibilities. Agreement would give focus and direction to studies in a sector in which the financial relationship between individual bodies and the Assembly differs. The Auditor General could undertake the RSLs' studies programme if, at some future stage, the Assembly, under clause 1, transferred to him, or asked him to exercise on its behalf, supervisory functions in respect of them. However, that would be a matter for the Assembly.

Amendment No. 16 would arguably require the Auditor General to undertake the programme of studies in respect of RSLs personally. He or she would

be a very busy person if that were the case. The wording that the amendment would delete makes it clear that the Auditor General has the discretion to arrange for the work to be undertaken by a member of his or her staff, or to be contracted out. The amendment could limit the Auditor General's operational flexibility and, potentially, the value for money obtained in undertaking the study programmes, particularly as the Auditor General will head a far larger organisation than exists currently and will assume wider responsibilities, such as those of an accounting officer, which we will come to discuss. Even if the programme of work were undertaken by a staff member or a private sector auditor contracted by the Auditor General for that purpose, he would still be responsible for the end result. For that reason, the amendment is unnecessary.

Amendment No. 8 would delete the prohibition in the clause on the Auditor General being able to question the merits of the policy objectives of a RSL while undertaking a programme of value-for-money studies agreed with the Assembly. We return to the principle that I referred to when speaking about amendment No. 7: the Auditor General cannot question the policy objectives of a body for which he has audit responsibilities. He may express a view on the way in which the body sets about achieving its objectives and whether its approach represents value for money, but questioning the merits of policy would compromise his independence.

Amendments Nos. 17 to 19 are related in that they are designed to show that the criminal penalties in the Bill should be rationalised. They would align the penalty for a failure to comply with a requirement of the Auditor General by a person connected with a RSL with the penalty that applies to a failure to comply in respect of a local government audit. The point has been made in the House of Commons and previously in debates in another place that the penalties attaching to certain provisions are not consistent. That charge was repeated by the hon. Member for Leominster this morning, and other amendments make the same point.

The principal objective of the Bill, in a busy parliamentary timetable, is to create a single audit framework in Wales. It does so effectively and has been widely welcomed. Indeed, the principles behind the Bill and its objectives have been greatly appreciated. I acknowledge that there is a divergence within the Bill with regard to criminal penalties. However, they reflect sanctions in other legislation, most notably the Audit Commission Act 1998. The purpose behind that, against the background of a criminal justice system for England and Wales, is that there should not be an undue difference in the penalties applying in England and Wales. From that standpoint, the Government are being consistent rather than inconsistent.

The level of the penalty in respect of RSLs in Wales is the same as that currently applying to the sector in England and Wales given similar circumstances. That is the appropriate approach. Should the penalties be subject to further review, that would be on a consistent England and Wales basis. From a practical

standpoint, I understand that the Audit Commission has indicated that it does not recall an instance when such criminal penalties have been invoked.

On amendment No. 14, the hon. Gentleman stated that the clause as currently drafted requires the Auditor General to undertake only such studies that the Assembly requires. It must be remembered that the Auditor General is not the statutory auditor for RSLs in Wales—a point made on Second Reading and reiterated in my letter to the hon. Member for Bridgwater. It must also be remembered that the programme of studies under the clause must be agreed with the Auditor General. Consequently, the Auditor General has a significant input to what studies should be taken forward in any programme.

The hon. Gentleman also touched on the fact that the Assembly may vary criminal sanctions under its secondary legislation powers. I acknowledge that where functions have been devolved to the Assembly—for example, on criminal offences— there is scope for divergence through secondary legislation. The provision in clause 39 for separate Welsh account and audit regulations currently made under the Audit Commission Act 1998 is an example, although the provisions in the respective England and Wales regulations are consistent in practice. That does not alter the Government's view on sanctions in primary legislation.

I am sure that we will return to the issue in a wider debate, perhaps on clause 54, but I hope that with those reassurances the hon. Gentleman will be happy to withdraw the amendment.

Bill Wiggin (Conservative, Leominster)

The Minister has satisfied my curiosity on all the amendments except Nos.18 and 19, which, as he mentioned, are based on the consistency of criminal law between England and Wales. My concern, to which the Minister alluded, is that the Government have put the Bill together in a short parliamentary time, and that even although they have tried to ensure that the Bill is consistent with English law, that will be ultimately impossible because the Assembly has the power under clause 39 to make changes.

I accept that the Government have done their best with what they have, but I believe that it is a missed opportunity. Such inconsistencies give the impression of a rushed job, which is a shame. I know that the Government are determined to give the National Assembly everything that it asks for as quickly as possible, which is consistent with what they have always said. However, the measure in question is a mistake, and I urge the Government to reconsider these matters before the Bill reaches the statute book.

Little would be gained by pursuing the amendments now, so I will not do that. It would also be wrong in the spirit of our constructive discussions this morning to push for a vote. The Minister made a valuable point when he said that Conservatives Members broadly welcome the Bill, and I take this opportunity to emphasise that. The purpose of the Committee is to iron out any wrinkles. I believe that the issue of consistency is a little wrinkle, and the Minister

probably recognises that too. The difference is that he is prepared to let it go, so under the circumstances I am too. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 5 ordered to stand part of the Bill.

Clauses 6 to 9 ordered to stand part of the Bill.

Clause 10 - Accounting officer

Bill Wiggin (Conservative, Leominster)

I beg to move amendment No. 45, in page 9, line 18, at end insert

'for no more than three months'.

The amendment is based on discussions in another place about why the clause is worded as it is. It is a probing amendment to ascertain how long the office of the Auditor General could be left vacant or how long the post could be filled by a temporary replacement, while the Auditor General is incapable of discharging his duties, before the temporary appointee becomes permanent, and is therefore appointed by the Crown as opposed to the Audit Commission. There is a need to specify a time scale in the Auditor General's absence, and that is the sole purpose of the amendment. Three months is an acceptable period, but that may not fit in with the Government's views. However, instead of opposing my amendment, I hope that they will recognise its value and that if they are not happy with the time frame of three months, they will change it.

Don Touhig (Labour/Co-operative, Islwyn)

The amendment would limit to three months the period for which the Audit Committee may designate a member of the Auditor General's staff as the Wales Audit Office's temporary accounting officer. That is an arbitrary and inappropriate time limit. The Bill makes provision designating the Auditor General as the accounting officer for Wales for the Wales Audit Office. The consequence of such an amendment would be that if the post of Auditor General became vacant, or the Auditor General was incapacitated for more than three months, the Audit Committee would have to consider alternative arrangements with a view to making a fresh temporary appointment.

Under existing accountancy officer conventions for England and Wales, arrangements are made for designating an acting accounting officer if the accounting officer is incapacitated for four weeks or more. There is no reason to suppose that similar arrangements will not apply in the Wales Audit Office. If an acting accounting officer is competent to perform the duties, there is no reason why he or she should not continue them until the appointment of a new Auditor General or until his or her return to work. The amendment would also create an inconsistency with other statutory arrangements for the designation of acting accounting officers—for example, in respect of the Welsh Administration ombudsman under the

Government of Wales Act 1998. I hope that the hon. Gentleman finds that helpful, and that he will therefore ask leave to withdraw the amendment.

Bill Wiggin (Conservative, Leominster)

The amendment makes the point that if we take the Auditor General seriously, we need to know how long Wales can cope without one. We suggested three months for a temporary Auditor General. I accept the Minister's criticism that that is an arbitrary time, which it is, but as I said earlier, we take the Bill, which we support, seriously. It is an important change in the law. By tabling the amendment we hope to ascertain how long the Government feel the gap should be left open or filled by a temporary or designated member of staff. In order to give the Auditor General the credibility that he deserves, we should know how for long he can be incapacitated before his important role is permanently filled. I accept that some flexibility could be built into the wording; that is what the amendment is designed to probe. I hope that the Minister will say how long the gap can be left open or whether another body should have the ability to decide on the period. It is important not to leave the office of Auditor General potentially unfilled by a permanent appointment for an unspecified period.

Don Touhig (Labour/Co-operative, Islwyn)

The hon. Gentleman referred to appointment by the Crown rather than by the Audit Commission. The current provision allows a temporary accounting officer to be appointed by the Audit Committee, not the Crown or the Audit Commission. As I said, under existing accountancy conventions for England and Wales, arrangements are made for designating an acting accounting officer if the accounting officer is incapacitated for four weeks or more. How long that would continue would be at the Audit Committee's discretion, and his terms and conditions of appointment would be part of that; for example, there would be statutory sick leave. We are keen not to tie anyone's hands by having a fixed and arbitrary period of three months, as suggested by the amendment. I hope that the hon. Gentleman will recognise that within four weeks steps would be taken and terms and conditions on the appointment would kick in and affect the length of time that a person might be permitted to be away before further action had to be taken.

Bill Wiggin (Conservative, Leominster)

As I now understand it, there will be a four-week period during which the Auditor General might be a bit iffy. Thereafter the role would be filled by a temporary appointment. Obviously we would have to wait to ascertain the nature of his discomfort or inability. I am grateful to the Minister for mentioning that this eventuality would be written into his contract. I agree that the amendment does not attempt to tie people's hands. The Minister's replies have made me feel far more comfortable about the nature of the Bill. Anyone who wonders how long the Auditor General can be absent will need to know the nature of his terms and conditions. I doubt whether they will be privy to them, but at least we know that

that will be taken into account. That is all we sought to do with the amendment. I am delighted with the Minister's reply. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 10 ordered to stand part of the Bill.

Clause 11 - Access to information, etc by Auditor General

Bill Wiggin (Conservative, Leominster)

I beg to move amendment No. 20, in page 11, line 4, at end insert—

'(6A) A person commits an offence if without reasonable excuse he fails to comply with a requirement imposed under this section.

(6B) A person guilty of an offence under subsection (4A) is liable on summary conviction to a fine not exceeding level 3 on the standard scale.'.

Amendment No. 20 is an alternative to amendments Nos. 17 to 19, which seeks to bring consistency to clauses 5 and 11 with regard to criminal sanctions. It would add a criminal offence for non-compliance with the Auditor General's right of access to general information, to make it consistent with the criminal sanctions in clause 5. I repeat that we do not believe that criminal sanctions are necessary, but the amendment is an attempt to highlight the inconsistencies in the Bill and to try to resolve them. If the Government think that criminal sanctions are necessary for non-compliance by registered social landlords or local government in clause 5, why is it not a criminal offence in clause 11?

Don Touhig (Labour/Co-operative, Islwyn)

Amendment No. 20 would apply criminal sanctions to non-compliance with clause 11 access rights. This would apply to persons connected with the National Assembly, its sponsored public bodies, NHS bodies in Wales and other public bodies funded by the Assembly. These bodies are covered by accounting officer conventions. It would also apply to those who hold documents and information relating to the exercise of the Auditor General's functions in relation to bodies such as the Assembly-sponsored public bodies and health bodies in Wales. In the first instance the matter would be brought to the attention of the relevant body's accounting officer and then the National Assembly's Audit Committee.

The Committee would be able to call witnesses to seek an explanation. The Committee could issue and publish a report on the matter. The principal accounting officer of the National Assembly and the accounting officers of other public bodies in Wales are also required to give evidence to the Public Accounts Committee, if invited. Ultimately, an instance of non-compliance could result in the removal of accounting officer status. Withdrawal of that status could well result in the individual concerned not being able to continue in his or her job. There are no equivalent accounting officer conventions in the local government sector.

I am not aware of any instance in Wales where the imposition of criminal sanctions would have led to any more satisfactory resolution of access difficulties in the

context of clause 11 bodies. Criminal sanction provisions were not incorporated in the Auditor General's original access rights provision in the Government of Wales Act 1998. Lord Sharman also did not recommend the creation of criminal offence provisions in this context in his report. The Government are satisfied that the extended rights of access to documents and information under clause 11 could be secured either under the accounting officer conventions or by way of an application for judicial review.

In judicial review proceedings, where available, the Auditor General could seek a mandatory order, compelling the person, persons or body to comply. Alternatively, he could apply in the civil courts for a mandatory injunction to compel the performance of a duty to provide access. We consider those potential remedies to be formidable. For instance, a subcontractor would think twice about refusing to comply with the Auditor General's rights of access if faced with the prospects of litigation and the costs that would inevitably ensue. On that basis, the Government consider that it would not be appropriate or necessary to apply criminal sanctions in respect of the provisions of clause 11, which would create a criminal offence that would not exist in England. We have again sought a degree of consistency, recognising that there were differences in the earlier debate, and I hope that the hon. Gentleman will be satisfied with that.

Bill Wiggin (Conservative, Leominster)

I should like to be satisfied, but the truth remains that if everything that the Minister says is right, why is it necessary to apply it to social landlords or local government? There is an inconsistency here: we either need criminal sanctions or we do not. I would expect a judicial review to be a long and difficult process, so it makes it much easier to have, if necessary, criminal sanctions throughout the Bill, or not.

At present, there is a difference between social landlords and local government, and the amendment. That is the problem that the Government face, and I do not think that the Minister answered that. He must understand why I am concerned about this, and unless he receives any divine inspiration, it will be difficult for him to answer the point. It is important to be consistent in legislation. Many Members have turned up this morning to contribute to our debates, and they would want, just as much as I do, a consistent Bill for the people of Wales, not different rules for different people according to how they are pigeonholed. I am not at all happy with the Minister's reply at this stage.

Don Touhig (Labour/Co-operative, Islwyn)

I am sorry that the hon. Gentleman is not happy— [Interruption.] I am mortified. It will keep me awake for most of the night. I point out to him that in a later debate, which I do not want to anticipate, he will be arguing against criminal sanctions. The Opposition should exercise a degree of consistency as well. In my response to him, I sought to point out a number of provisions that will be in place in order effectively to deal with his problems, short of applying criminal sanctions. I am sure that in our later

debate, we shall hear much about the need not to have criminal sanctions in respect of other matters to be considered by the Committee. On that basis, I hope that he is prepared to accept the points that I have made.

Bill Wiggin (Conservative, Leominster)

I take the Minister's point about criminal sanctions. I think that I emphasised enough that I do not believe that criminal sanctions are necessary. On that basis, I should like to see them removed for the other classes. We are not going to agree on this, and I want to make progress. It is an important Bill, but this is another of those little wrinkles that need to be ironed out, and we are doing our best to do so.

Don Touhig (Labour/Co-operative, Islwyn)

We have talked today about the Second Reading debate in the other place, which helped to improve the Bill. I point out to the hon. Gentleman that one of his colleagues in the other place regarded criminal sanctions as a blunt instrument. Why should we want to extend them?

Bill Wiggin (Conservative, Leominster)

I do not mind if we remove criminal sanctions from the Bill, but the problem is the inconsistency. Either they are good for registered social landlords and local government employees, or they are not. That is the sticking point for the Committee. I have sought to remove them, I have sought to put them back in, and I shall probably seek again to take them out, because I am not going to let the Minister, with such an inconsistency—[Interruption.] The Minister is accusing me, from a sedentary position, of being like a Liberal Democrat. That is something that would give some people a sleepless night; what a very low and dirty insult that must be, and I am deeply hurt.

I was about to withdraw my amendment, but I shall now push it to a vote on the basis of that rotten insult. No, Mr. Griffiths, I am joking, and I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 11 ordered to stand part of the Bill.

Clause 12 - Local government bodies in Wales

Don Touhig (Labour/Co-operative, Islwyn)

I beg to move amendment No. 47, in page 11, line 38, leave out paragraph (g) and insert—

'(g) a fire and rescue authority in Wales constituted by a scheme under section 2 of the Fire and Rescue Services Act 2004 or a scheme to which section 4 of that Act applies;'.

Win Griffiths (Labour, Bridgend)

With this it will be convenient to discuss Government amendments Nos. 49 and 54.

Don Touhig (Labour/Co-operative, Islwyn)

I shall be brief in speaking to these amendments, which take account of the effect of the Fire and Rescue Services Bill on this Bill. The Fire and Rescue Services Bill will replace fire authorities with fire and rescue authorities. The amendments will change the three relevant references in the Bill in clauses 12 and 46 and schedule 1. The Fire and Rescue

Services Bill has completed its passage through the House. Consideration on Report in another place in scheduled for early July and the debate on Third Reading will take place before the end of July. There is a reasonable expectation that it will receive Royal Assent in this parliamentary Session, so I hope that the Committee will allow the amendments to stand.

Amendment agreed to.

Bill Wiggin (Conservative, Leominster)

I beg to move amendment No. 3, in clause 12, page 12, line 7, leave out 'or substantially'.

Our discussions on this amendment should be quick because it deals with a subject that we have already covered. I am glad that the Committee has been proceeding with a degree of humour—who says that audit is humourless? Amendment No. 3 would delete from clause 12(3)(b) the words ''or substantially'', which also appear in clause 1(2)(b). The phrase ''substantially funded'' is too vague and has a wide-ranging interpretation. What exactly is meant by

''substantially funded from public money''?

Will the Minister clarify what private sector bodies might be included under paragraph (b) as being substantially funded from public money? I know that he dealt with that question earlier, but this is an important subject and I am sure that he will clarify the situation for anyone with doubts over what ''substantially'' adds to the Bill.

Don Touhig (Labour/Co-operative, Islwyn)

The amendment also deals with the definition of ''public body'' in the context of enabling the National Assembly by order to amend the categories of body defined as local government bodies in Wales to take account of future circumstances. The definition used in clause 12 is consistent with that used in clause 1, which we considered earlier. Again, the amendment could have an unnecessarily restrictive effect.

The purpose of the definition in clause 12, and the rest of the Bill, is to maximise the scrutiny and safeguards in respect of the use of public money. The amendment would undermine that intention. It would mean that a category of body wholly funded by public money could be added to clause 12(1), but a category of body that derived anything less than 100 per cent. of its funding from the public purse could not.

As I emphasised earlier, many public bodies do not receive all their funding from a public source. For example, a body could not be added to clause 12(1) if it raised a proportion of its funding from income derived from the provision of services. In that case, the body could not be added unless it was clearly carrying out public functions. Income derived from fees or leisure-related receipts, such as theatre tickets or leisure centre admissions, would not count as public funding if the amendment was accepted. With that explanation, I hope that the hon. Gentleman will reflect further and withdraw the amendment.

Bill Wiggin (Conservative, Leominster)

Indeed. I am grateful to the Minister for that reply and, as I hinted earlier, I suspected that that would be the case. Having reflected further, I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 12, as amended, ordered to stand part of the Bill.

Clause 13 ordered to stand part of the Bill.

Clause 14 - Appointment of auditors

Bill Wiggin (Conservative, Leominster)

I beg to move amendment No. 23, in

clause 14, page 12, line 23, leave out subsection (3).

Win Griffiths (Labour, Bridgend)

With this it will be convenient to discuss the following amendments: No. 25, in

clause 14, page 12, line 30, leave out subsection (5).

No. 24, in

clause 14, page 12, line 35, leave out subsection (6).

Bill Wiggin (Conservative, Leominster)

I hope that the Minister will not again accuse me of belonging to some dodgy party.

Roger Williams (Liberal Democrat, Brecon and Radnorshire)

On a point of order, Mr. Griffiths. I am not sure that that term is appropriate to parliamentary procedure.

Win Griffiths (Labour, Bridgend)

We will reflect on that.

Bill Wiggin (Conservative, Leominster)

Indeed. I think that I was very kind to the Minister, as were you, Mr. Griffiths.

Amendment No. 23 would delete subsection (3) of clause 14 and enable the Auditor General to audit local authorities, as he does with public bodies under part 1. He should not be prohibited from doing so, as proposed in subsection (3). That is why we seek to delete that subsection.

Why is there special treatment for local authorities, which are also substantially funded by central Government through the Assembly? Why have not all public sector bodies been placed on the same footing in the Bill with respect to the appointment of auditors? If that has happened in NHS auditing, which creates a new model for Wales, why not for local authorities? That is another reason why the Minister cannot use the principle of consistency with England, as the Bill creates an inconsistency in relation to NHS audits. If he claims that there would be a conflict of interest in auditing local authority bodies, surely there is a conflict of interest in the Auditor General auditing NHS bodies too.

On Second Reading, the Minister argued that local authorities are different because they are democratically elected. Can he explain why that is a legitimate argument for ruling out the Auditor General for Wales being able to appoint himself? If the situation requires an even hand, who better to apply that than the Auditor General?

Amendment No. 24, which is probing, would delete subsection (6), under which the Auditor General is required to consult the local authority before appointing an external auditor. The amendment's

purpose is to discover why the Auditor General has to consult the local authority in the first place and what would happen if it were to refuse his recommendation.

Amendment No. 25 would delete the power in subsection (5) of joint audit appointments. There are potential problems with joint audits, such as duplication and cost. There is also the risk of omission when things escape audit. Joint audits are not the norm in the private sector for those reasons. Again, provisions have been lifted from the Audit Commission Act 1998, but I believe that they are unnecessary.

Don Touhig (Labour/Co-operative, Islwyn)

Amendment No. 23 would enable the Auditor General to appoint himself in a personal capacity as the auditor of a local government body. A key objective of the Bill, which we discussed on Second Reading, is the preservation of the constitutional independence of local government in the new audit arrangements. The prohibition on the Auditor General appointing himself in a personal capacity is a key safeguard in ensuring that that is achieved.

Local government raises a significant proportion of its revenue from the local electorate to whom it is accountable. That has relevance to the position of an appointed auditor, who has specific responsibilities to the electors of a government body as well as the body itself.

The Bill preserves the right of a local government elector to inspect and copy a local government body's statement of accounts. The appointed auditor is under a duty to give an elector or a representative an opportunity to question him or her about the accounts and to make objections in respect of them. An elector may, for instance, request the auditor to declare an item of account unlawful. The auditor is under a duty to consider any such objection and to notify the objector formally of his or her decision.

In undertaking those duties, it is essential that an auditor should be impartial and, just as importantly, be perceived to be impartial both by the local government body and the electors whom it serves. The avoidance of any potential for a conflict of interest arising—for instance, from the exercise of other statutory responsibilities—is essential.

The Auditor General is the statutory auditor of the National Assembly and bodies directly accountable to the Assembly. The Assembly provides most funding for local government in Wales. If the Auditor General appointed himself or herself as auditor to individual local authorities in those circumstances, the distinctness of local government's constitutional and democratic independence would be seen to have been lost.

In practical terms, an important function of the Auditor General under the new arrangements will be to monitor the performance of auditors that he or she appoints to local government bodies, and to consider complaints that may be made against them. However, that important control would not be available if the Auditor General appointed himself or herself as auditor in a personal capacity. The Auditor General will also be responsible under clause 20 for setting a scale of fees and charges for the audit of local

government bodies, from which he would derive benefit. He will also be responsible under clause 16 for preparing and issuing a code of audit practice, to which he would have to adhere. I hope that I have persuaded the hon. Gentleman to reflect further on amendment No. 23.

Amendment No. 25 appears to be designed to deprive the Auditor General of the discretion available to the Audit Commission to make a joint audit appointment. The Audit Commission will retain the discretion in England should the Bill be enacted, but the amendment would therefore limit the Auditor General's powers in comparison. Dual appointments, although not common, are relevant if specific skills not possessed by the initially appointed auditor are needed for particularly complex audits, or if a form of peer review is undertaken during an audit.

The infrequent use of the power does not detract from its potential value. As I have said in other contexts, the financial accountability environment in which auditors operate is becoming increasingly complex. We touched on that issue on Second Reading. It would not be appropriate to deprive the Auditor General of the flexibility that this power will give him to meet future needs.

Under amendment No. 24, the Auditor General would no longer need to consult a local government body on the appointment of its auditor. On Second Reading, I said that an audit watchdog could also be a client body's best friend. The serious point behind that remark is that the relationship between auditor and audited is, and should be, far more constructive than stereotypes sometimes convey. In an increasingly complex financial environment, the auditor is a source of valuable advice, reassurance and help on matters such as accounting systems and risk management, which is changing the whole way in which audit works.

The 2004 general report of the Auditor General for Wales refers to examples of advice sought and given to clients. High standards of financial accountability are achieved through such a positive, proactive relationship. Withdrawing the right of a local government body to be consulted on the appointment of its auditor would risk undermining the basis for a positive working relationship, and financial accountability standards could suffer as a result. I hope that, with those explanations, the hon. Gentleman feels able to withdraw the amendment.

Bill Wiggin (Conservative, Leominster)

The Minister's approach to amendment No. 23 is laudable, and I am grateful to him. It was far from clear, certainly to me, that the accountability of a local government audit would clash with the accountability of the Auditor General. However, the Minister made that clear, which satisfies me that we must have the right reporting functions working as he outlined.

The Minister also dealt with amendment No. 25 effectively. I have no wish to see duplication of costs and certain elements perhaps falling between two separate audits. However, his point about not tying the Auditor General's hands is a good one and I have no difficulty in not pressing that amendment to a vote.

On amendment No. 24, I would be grateful if the Minister told us what would happen if a local authority refused the Auditor General's recommendations. Until he does so, I am unable to say that I will not press it. I hope that he replies to that point.

Don Touhig (Labour/Co-operative, Islwyn)

I tried to make it clear when I responded to the hon. Gentleman on amendment No. 24 that it is important for a good working relationship between the Auditor General and local government that there should be consultation about the appointment—

Bill Wiggin (Conservative, Leominster)

I am grateful to the Minister for giving way. I absolutely agree with him that in normal circumstances there would be no reason for a local authority to refuse the Auditor General's recommendation. However, given the purpose of the measure and the safeguards built into it, the only time it will be needed is when a local authority is up to something that it may later regret, and therefore it may wish to delay things by refusing the Auditor General's recommendation. I am pressing the Minister because I want to find out what would happen in those circumstances.

Don Touhig (Labour/Co-operative, Islwyn)

I am most grateful for the hon. Gentleman's intervention. It has enabled me to give an answer that might satisfy him. I was talking about a consultation; the Auditor General will continue to appoint the auditor if there is no good reason not to do so. It is a consultation, and at the end of the day the power will be with the Auditor General to appoint the auditor.

Bill Wiggin (Conservative, Leominster)

What a tremendous response; it was just what we needed. I thank the Minister very much for his reply, which deals admirably with the whole issue. Conservative Members support the Bill; we are just trying to iron out the wrinkles. With great pleasure, I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 14 ordered to stand part of the Bill.

Clause 15 - Persons to assist auditors

Don Touhig (Labour/Co-operative, Islwyn)

Clause 15 is an important practical provision. If it were not to stand part of the Bill, the Auditor General would be unable to approve arrangements for one or more persons to assist an auditor appointed to a local Government body in the exercise of his or her functions. The clause would enable an appointed auditor to seek assistance in the exercise of those duties on matters that may be of significant complexity, such as taxation or the interrogation of complex information databases. It would also enable the Auditor General to oversee such arrangements.

A newly appointed auditor would benefit from having the assistance of an outgoing auditor in respect of a specific ongoing aspect of an audit brief, such as a criminal investigation. Under the present arrangements, the Audit Commission has standing guidance on approval arrangements, which include those for the delegation of an auditor's functions under such arrangements, although the guidance makes it clear that the delegation arrangements do not diminish the ultimate responsibility of the audit supplier appointed by the commission.

The delegation arrangements specify the level below which the audit functions may not be delegated. Decisions on delegations are taken personally by the district auditor or the partner-director of any other appointed auditor. It would be open to the Auditor General to adopt these or similar arrangements.

If clause 15 were to be deleted, it would significantly hamper an appointed auditor in Wales who may need specialist support in the exercise of his or her functions. I hope that the hon. Gentleman will recognise the value of such support.

Bill Wiggin (Conservative, Leominster)

I was going to ask the Minister why this should not be part of new section 96C of the Government of Wales Act 1998, as inserted by clause 2. However, I may have missed the suggestion in the clause that the people in question will be of a specialist nature, with expertise that may not include auditing. I recognise that as business has become more complex, such people would be necessary. I am grateful to the Minister for his reply, which satisfies my curiosity about the clause.

Question put and agreed to.

Clause 15 ordered to stand part of the Bill.

Clause 16 - Code of audit practice

Bill Wiggin (Conservative, Leominster)

I beg to move amendment No. 27, in page 13, line 25, leave out subsection (4).

Win Griffiths (Labour, Bridgend)

With this it will be convenient to discuss the following:

Amendment No. 28, in clause 16, page 13, line 33, leave out subsection (7).

Bill Wiggin (Conservative, Leominster)

This is a busy morning for some of us. In speaking to amendment No. 27, I shall include amendment No. 28. They are probing amendments concerning the audit practice code in clause 16.

Amendment No. 27 seeks to delete subsection (4) in order to ascertain the Assembly's role in relation to the audit practice code. Before the Assembly gives its approval, can it amend the code? If it could, that would undermine the Auditor General's authority.

Amendment No. 28 removes subsection (7), because even after the code has been issued by the Auditor General, and has been approved by the Assembly, either House of Parliament can annul the code by statutory instrument. Can the Minister explain why that power is included, and in what circumstances it might be used?

Don Touhig (Labour/Co-operative, Islwyn)

The amendment would remove the National Assembly's ability to approve a draft code of practice for the audit of local government bodies in Wales before its introduction by the Auditor General. The code would incorporate best professional practice with respect to standards, procedures and techniques to be adopted by auditors in the exercise of their functions. The provision enabling the Assembly to approve the code has been incorporated in the Bill as a result of representations made during pre-legislative scrutiny and public consultation on the draft Bill. Preliminary work is already under way by the National Audit Office in Wales and the Audit Commission in Wales in the preparation of such a code.

Similarly, amendment No. 28 would remove the ability of either House of Parliament to annul the draft code by negative resolution procedures. The provision for parliamentary consideration of the draft code was also included in the Bill in response to views expressed during consultation. Under the provisions of section 4 of the Audit Commission Act 1998, the express approval of Parliament is required in relation to the existing code of audit practice in England and Wales. It is appropriate that a code of practice discrete to Wales should be approved by the Assembly and, should it wish to do so, Parliament should also have the opportunity to scrutinise the code and comment on it.

Very significant sums of taxpayers' money fund local government services in Wales, and it is right that there should be an opportunity for democratic scrutiny of the way in which local government bodies are to be audited. That does not compromise the Auditor General's independence, because neither the Assembly nor Parliament would have the right to modify the code. In the very unlikely circumstances of the draft code not being approved, it would be referred to the Auditor General for further consideration. I think that I have answered the hon. Gentleman's specific point: the Assembly would not have the power to amend the code.

Bill Wiggin (Conservative, Leominster)

I am grateful to the Minister for his reply. The concern is that the Auditor General could be undermined by tweaking by the Assembly. The Minister has made it clear that that will not happen, and I am grateful for that, but in the negotiations during the preparation of the draft code, which would be laid before the Assembly, such a problem could exist. Clearly, the Assembly must have a say over the code, as it will have to live by it. Equally, the Minister

will recognise my concerns that during the negotiation phase of any code before it was laid before the Assembly, there could be a similar problem. The same argument applies to the parliamentary element here: it is important that Parliament retains the power to annul the code by statutory instrument. I do not think that it ever will, but I recognise the value of leaving the provision in the Bill. We have expressed our concern about untoward behaviour taking place during the negotiations. I am sure, however, that that will never happen. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 16 ordered to stand part of the Bill.

Clauses 17 to 23 ordered to stand part of the Bill.

Clause 24 - Consideration of reports in public interest

Bill Wiggin (Conservative, Leominster)

I beg to move amendment No. 29, in page 18, line 4, leave out from 'are' to end of line 8 and insert

'those listed in section 12(1)'.

Win Griffiths (Labour, Bridgend)

With this it will be convenient to discuss the following:

Amendment No. 30, in clause 25, page 18, line 37, leave out subsection (3).

Bill Wiggin (Conservative, Leominster)

We tabled the amendments to ask why there are various lists of bodies in the Bill. Amendment No. 29 would delete the four bodies that are listed in clause 25(3) and replace them with the nine bodies that are listed in clause 12(1). Amendment No. 30 seeks to delete clause 25(3) because we wish to establish why the four types of bodies receive different treatment. These have all doubtlessly been copied from existing legislation, which again highlights the wasted opportunity to consider the audit regime in Wales afresh. I look forward to hearing why those four have been picked out.

Don Touhig (Labour/Co-operative, Islwyn)

Amendment No. 29, by requiring all local government bodies to consider reports as soon as practicable, would relax the requirement on the larger bodies. There would be no specific deadline, either of one month or any longer period by which they would be required to consider reports. That would be a retrograde step. The one-month deadline for the larger bodies is also consistent with the tighter time scale introduced on an England and Wales basis by the Local Government Act 2003. It reduced the time scale for consideration from four months.

Furthermore, the safeguards provided by clauses 25 and 26 are dependent on the distinction between the larger bodies subject to the one-month deadline and the smaller bodies. If the amendment were agreed to and the distinction were removed, the safeguards in clauses 25 and 26 would cease to apply. Those clauses require the larger local government bodies to make specific decisions in response to a public interest report

within a definite time scale, and require minimum publicity for a meeting to consider the report and its subject matter.

Bill Wiggin (Conservative, Leominster)

I can see where the Minister is taking the argument about the sizes of bodies. Does he not feel that local authorities should perhaps have been included in that list of four?

Don Touhig (Labour/Co-operative, Islwyn)

I shall return to that point in a moment.

The requirements set out in clause 24 as drafted make robust and pragmatic arrangements for the consideration of reports in the public interest. Amendment No. 30 would have the opposite effect, by imposing on the smaller bodies a definite timetable and process for considering certain written recommendations from their auditors. The fact that the smaller local government bodies are not currently subject to such requirements recognises their comparatively small administrative resource base and the fact that they meet with less frequency. I hope that that covers the point that particularly concerned the hon. Gentleman and that he will feel able to withdraw the amendment.

Bill Wiggin (Conservative, Leominster)

I am not sure, because I do not know the intimate details, whether an internal drainage board is larger or smaller than a local authority in Wales. I suspect that they are different in every case. Like most things in life there is no set of rules. The Minister's point that smaller bodies should not be under the same pressure as larger ones is a good one. I am not sure that we should be so generous in the Bill, but if that is what the Minister wants, there may be a better way of doing it. I am not suggesting that my amendments are perfect, but if the size of the body and the frequency with which it meets are the issues, we should perhaps specify those factors and force it to report in the way that the Minister has outlined.

In drafting the Bill, the Minister has obviously considered how things are today, but hon. Members will agree that we must think of most eventualities. I am not sure that he has done that. I would be grateful if the Minister could put my mind at rest. I am concerned that the size of the body and the frequency with which it meets are the only issues, because organisations such as police authorities, which are very important to people, should be as accountable as humanly possible. That is what we are trying to dig at.

Don Touhig (Labour/Co-operative, Islwyn)

The hon. Gentleman asked why there are various lists of bodies in clauses 24 and 25, but there are only two lists. One set of bodies is larger and better resourced and tends to meet more frequently. I should also stress that local authorities are subject to more demanding requirements in the Bill, and we are following the right route on that. The other list is of smaller bodies. I hope that that explanation addresses the hon. Gentleman's concern about the difference in sizes.

Bill Wiggin (Conservative, Leominster)

I am grateful for that reply, and it mollifies my concerns. We want to make progress this morning, so I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 24 ordered to stand part of the Bill.

Clauses 25 to 27 ordered to stand part of the Bill.

Clause 28 - Additional publicity for non-immediate reports

Don Touhig (Labour/Co-operative, Islwyn)

I beg to move amendment No. 48, in clause 28, page 21, line 16, leave out 'body' and insert 'auditor'.

The amendment corrects a minor error in clause 28. Subsection (3)(b) enables a member of the public to obtain, on payment of a reasonable sum, a copy of a non-immediate public interest report prepared by an auditor under clause 22 in respect of an audited body's accounts. It states that a copy of the report should be supplied by the audited body, but the reference should be to the body's auditors. The amendment corrects that mistake, and I commend it to the Committee.

Amendment agreed to.

Clause 28, as amended, ordered to stand part of the Bill.

Clause 29 ordered to stand part of the Bill.

Clause 30 - Inspection of documents and questions at audit

Bill Wiggin (Conservative, Leominster)

I beg to move amendment No. 32, in page 22, line 4, leave out 'an interested' and insert 'a'.

Win Griffiths (Labour, Bridgend)

With this it will be convenient to discuss the following:

Amendment No. 33, in clause 30, page 22, line 19, leave out 'means' and insert

'includes but is not limited to'.

Bill Wiggin (Conservative, Leominster)

The amendments deal with inspection rights during audits of local government bodies. Subsection (1) allows the accounts that are to be audited to be inspected by ''an interested person''. Amendment No. 32 proposes the replacement of that phrase with ''a person'' to find out what the Government mean by ''an interested person''. Clause 30 sets out the fact that the rights of information and documents do not apply to personal information, which is defined restrictively in subsection (4). Amendment No. 33 would widen the definition of personal information from just the fact that the person is employed and/or paid by the body.

I want to probe whether the clause has been drafted adequately to set out clearly what information people are restricted to obtaining. It is also interesting that the Bill makes no reference to the Data Protection Act

1998, which presumably covers all rights to information. Will the Minister explain why the clause has been so drafted?

Don Touhig (Labour/Co-operative, Islwyn)

Amendment No. 32 would widen the scope of the category of person entitled to inspect or copy the accounts and related documents of a local government body. If the amendment were to be accepted, a person would not need to be interested in the sense of having a practical interest in the accounts or affairs of the body concerned—for example, he would not have to be a local taxpayer, a resident or a person with a commercial interest in the affairs of the body audited. A body would have to accommodate anyone who wished to inspect and take copies.

The clause enables interested persons to inspect or make copies of documents relating to the accounts at an audit or of a local government body. It also gives a local government elector or his representative the right to question the auditor about the accounts. In practice, the reference to an interested person is very unlikely to represent a practical impediment to a person wishing to exercise a reasonable right of inspection. The terminology, however, entitles a local government body or auditor to resist any vexatious or frivolous requests.

Amendment No. 33 would widen the definition of personal information that a person is not entitled to obtain through inspection of the accounts or related documents, or questions to an auditor. The amendment is ambiguous, as, unlike the clause, it does not clarify or define the limits of what constitutes personal information; it could lead to confusion and misunderstanding. Much of what a lay person would consider personal information is protected by the Data Protection Act. Additional protection by third parties is not necessary in the context of the Bill.

I hope that the hon. Gentleman finds my response helpful and that he will consider withdrawing the amendment.

Bill Wiggin (Conservative, Leominster)

I always find the Minister's responses helpful, and that is especially so of the second part. I agree that my amendment may not necessarily involve the best possible drafting, but the situation is unusual and I would have thought that the Data Protection Act offered such protection.

The only question on which I want to press the Minister is that of ''an interested person''. The first people who spring to mind are journalists and those in the media. They may be fascinated by the matter, but they may not qualify as ''an interested person''. I am surprised that he will not accept my amendment, as I am often told that transparency is the key thing that we should seek in legislation. However, his point about vexatious, difficult and perhaps even frivolous requests is important, particularly as those are increasing in modern life. I would be grateful if he clarified the status of the media in this respect.

Don Touhig (Labour/Co-operative, Islwyn)

Many of us are subject to frivolous requests from time to time. Someone whom I do not know, and who is not one of my constituents, comes to the House every other year. He puts in a green card, giving the reason for his visit as ''tea''. There we are—we get some odd requests.

Bill Wiggin (Conservative, Leominster)

I get the same request from my dad.

Don Touhig (Labour/Co-operative, Islwyn)

The hon. Gentleman is concerned with what is meant by ''an interested person''. There have been only a handful of cases dealing with that meaning. A recent High Court case confirmed that the motive of the person seeking the information is irrelevant. That is important. The media are not considered interested by virtue of their being media, which was also confirmed in a recent case. That High Court indication is a significant contribution to the wider debate.

Bill Wiggin (Conservative, Leominster)

I expect we will read in the newspaper I quoted earlier that that means that the media are banned from finding out what local authorities are doing. I take the Minister's serious point; he has clarified who could and could not see the accounts. I am sure that the media will be able to find an elector to help them, so they will not be blocked, but it is important to clarify the situation at this stage. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

It being twenty-five minutes past Eleven o'clock, The Chairman adjourned the Committee without Question put, pursuant to the Standing Order.

Adjourned till this day at half-past Two o'clock.

Standing Committee D

Public Audit (Wales) Bill [Lords]

Clause 39 - Accounts and audit regulations

Bill Wiggin (Conservative, Leominster)

I beg to move amendment No. 34, in page 27, line 38, at end insert—

'(d) Any draft regulations which are within subsection (3)(b) shall not be made unless a draft of the regulations has been laid before and approved by a resolution of each House of Parliament'.

Welcome back, Mr. Griffiths, and I hope you had a good lunch. It is splendid to see you in the Chair. Amendment No. 34 would add a new subsection to clause 39 so that the approval of both Houses of Parliament must be given to any regulation made under the clause that creates an offence. We are concerned that the accounting regulations dealt with in clause 39 could create a criminal offence of non-compliance, which would be introduced by the Assembly without any parliamentary procedure. We hope that criminal sanctions would not be created in regulations on accounting offences, but proper parliamentary scrutiny must be in place in the event of such regulations being brought forward.

Although the clause mirrors section 27 of the Audit Commission Act 1998, the Government's argument cannot be for consistency, because the Assembly could create a criminal offence that does not exist in England. Surely the Government are eager to ensure that Parliament is involved in regulations made under the clause, as they proclaim that one of the principles of the Bill regarding criminal law is equivalence between England and Wales. The clause allows for exactly the result that they say they do not want.

Don Touhig (Labour/Co-operative, Islwyn)

Clause 39 empowers the Assembly, subject to consultation, to make regulations relating to the form and preparation of accounts by local government bodies in Wales. The regulations can also make provision concerning the public's right under the Bill to inspect documents and raise questions and objections. The Assembly can provide that a person who without reasonable excuse contravenes a particular provision of regulations made under the clause will be guilty of an offence.

Amendment No. 34 would make the Assembly's power subject to the approval of Parliament. The amendment would therefore restrict a power already

available to the Assembly by virtue of section 27 of the Audit Commission Act and the National Assembly for Wales (Transfer of Functions) Order 2001. Accounts and audit regulations allow for a different approach between England and Wales on interpreting non-compliance as an offence. However, to date, the approach has been consistent on a cross-border basis, which I hope will assuage the hon. Gentleman's concerns.

Before making regulations under this clause, the Assembly will be required to consult with the Auditor General, local government and accountancy bodies. Therefore, it would be inappropriate to fetter an existing power that the Assembly has in respect of regulations specific to Wales.

I cannot say whether you had a good lunch, Mr. Griffiths, as the hon. Gentleman mentioned, but my spies tell me that he had a busy time cycling around Westminster. I hope he feels better for it.

Bill Wiggin (Conservative, Leominster)

I am glad that the Minister is keeping an eye on me. I was on my bicycle, but we should not extend the powers to make that an offence—it is a helpful and environmentally sensitive way to get around.

I take the Minister's point that this is an existing power. He will have taken on board the equivalence argument that I made, so I see no point in pressing the issue further. We tabled amendments to try to get this issue right. Having drawn those concerns to the attention of the Committee, I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 39 ordered to stand part of the Bill.

Clause 40 - Documents relating to police authorities

Hywel Williams (Plaid Cymru, Caernarfon)

I beg to move amendment No. 46, in page 28, line 16, leave out 'may' and insert 'must'.

May I draw the Committee's attention to a matter that is of the utmost seriousness, given that we are debating the Public Audit (Wales) Bill, which concerns efficiency, economy and effectiveness? It cannot have escaped your attention, Mr. Griffiths, that my name has been spelled with an extra ''l'' on the amendment paper, so that, rather than being Hywel, I am miraculously transformed to ''Howeth''. There was obviously profligate use of the alphabet without prior permission. That demands the most immediate investigation on your part, and of course an immediate report to the Secretary of State and the Assembly. The question remains what to do with the extra ''l''. It cannot be ignored, destroyed or removed. I therefore suggest that it be donated to a deserving cause—perhaps to the hon. Member for Leominster (Mr. Wiggin)—so his constituency can become ''Lleominster'' and almost a Llan.

Bill Wiggin (Conservative, Leominster)

On a point of order, Mr. Griffiths. The hon. Gentleman is being generous with his l's, but my name, Bill, already ends in two l's. He should be grateful for the extra one.

Hywel Williams (Plaid Cymru, Caernarfon)

I must now turn seriously to clause 40 and amendment No. 46, which is probing. Under the clause, if the Auditor General receives a public interest report prepared under clause 22(5) or (6) by an appointed auditor that relates to a police authority and other authorities, he must send it to the Secretary of State and the Assembly. However, the clause does not similarly require the Auditor General, when sending a document to police authorities, also to send a copy to the Assembly and the Secretary of State. When receiving, the Auditor General must send copies; when sending, he is not required to send documents to the Assembly or the Secretary of State. The amendment is probing as to why there is not an equivalent requirement in both parts of the clause.

I am aware that the Auditor General might send many documents to police authorities and that not all of them will be of interest to the Secretary of State or the Assembly. However, there could be a public interest test. After all, that is what clause 22 is all about. It deals with immediate and other reports of public interest. That clause says that auditors should make a report, and immediate reports are mentioned several times. Subsection (5) states:

''In a case within subsection (3), the auditor must send the report to the body, and a copy of the report to the Auditor General''.

Subsection (6) states that

''the auditor must send the report to the body, and a copy of the report to the Auditor General''.

Auditors must send reports to the Auditor General, but he must do so only in some cases and may do so in others. As the amendment is probing, perhaps the Minister will enlighten us as to why there is a variation.

Don Touhig (Labour/Co-operative, Islwyn)

I am grateful to the hon. Gentleman for how he put that point. In fact, I think we are all grateful to him: he was the only Member who managed to introduce some humour to our Welsh Grand Committee debate on the Bill after pre-legislative scrutiny. That certainly disproves some things that are said about people in north Wales having no sense of humour. He has a great sense of humour, and we greatly appreciated it at that time.

Clause 40(1) already requires the Auditor General to send a public interest report relating to a police authority in Wales to the Assembly and the Secretary of State—in practice, the Home Secretary—as well as to the authority itself. The amendment would require the Auditor General to send to the Assembly and the Secretary of State any other document that he had sent to a police authority in Wales, irrespective of its importance or sensitivity, as the hon. Gentleman recognised. That means that the Auditor General would have to forward any document, even if it was of little importance or not entirely relevant. It could be said that he should pass on his acceptance of an invitation to the police ball, for instance, but I am sure that that is not the intention behind the amendment.

In cases in which information is not of public interest, it is more appropriate to allow the Auditor General to use his discretion as to what documentation he passes to the Assembly or the Secretary of State. I take the hon. Gentleman's point seriously, but we can safely leave it to the Auditor General to decide when it is in the public interest to send on a document—our experience has shown that. I hope that the points I have made satisfy him and that he will withdraw his amendment.

Hywel Williams (Plaid Cymru, Caernarfon)

Given that explanation and reassurance, I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 40 ordered to stand part of the Bill.

Clause 41 ordered to stand part of the Bill.

Clause 42 - Studies on impact of statutory provisions etc

Win Griffiths (Labour, Bridgend)

With this it will be convenient to take new clause 1—Comparative studies—

'(1) Studies carried out in section 41 or 42 may include comparative studies involving local government bodies in England if the Auditor General for Wales considers it desirable to do so for the purposes of his analysis of local government bodies in Wales.

(2) If local government bodies in England are to be included in any study under section 41 or 42, the consultation mentioned in sections 41(5) and 42(3) shall also include the Secretary of State and the Audit Commission.'.

The procedure is that if there is any vote on the new clause, it will occur later in our proceedings.

Bill Wiggin (Conservative, Leominster)

I apologise to the hon. Member for Caernarfon (Hywel Williams), who will know that my constituency already has a Welsh name—Llanllieni—but it was generous of him to offer me an extra 'l'.

New clause 1 would insert a new clause after clause 42 and thereby allow the Auditor General for Wales to extend his value-for-money studies to English local government bodies, provided he consults with the Secretary of State and the Audit Commission. The new clause would give the Auditor General the full power of comparative study, so that he would not feel confined to Welsh local government bodies and therefore unable to undertake a comprehensive analysis.

The Audit Commission in England will be able to study Welsh bodies, under schedule 2 to the Audit Commission Act, but there is no such power for the Auditor General. As the Bill stands, he must consider only Welsh bodies when carrying out comprehensive studies. Under clause 43, he must co-operate with the Audit Commission when carrying out value-for-money studies under clauses 41 and 42. However, co-operation with each other to assist with the other's value-for-money functions is not required.

Wales co-operates with England on Welsh studies, and England co-operates with Wales on English studies, but England does not have to co-operate with Wales on Welsh studies, or vice versa. I am concerned that, without the power to examine English bodies or the ability to require the co-operation of the Audit Commission, audits on Wales could be at a disadvantage compared with audits on England. It is not right that the Auditor General for Wales is in a worse position than his counterpart in England because he has to rely on the other party's good will.

Roger Williams (Liberal Democrat, Brecon and Radnorshire)

I, too, enjoy Committee work under your chairmanship, Mr. Griffiths—

Bill Wiggin (Conservative, Leominster)

When you are here.

Roger Williams (Liberal Democrat, Brecon and Radnorshire)

Yes, and it is a pleasure to contribute to the examination of this Bill.

I support the points made by the hon. Member for Leominster, because since the local government reorganisation in Wales and the establishment of 22 unitary authorities, comparisons between local government within Wales have been made more difficult. For example, my local authority area is rather large and very sparse in population, so it is not easily compared with other local authorities in Wales. Indeed, when I ask people what they think is the most sparsely populated local authority area in England, they usually decide on Cumbria. However, Powys is three times more sparsely populated than Cumbria.

It is difficult to decide on a family of local authorities with which to compare the delivery of services. It would be helpful if the Auditor General for Wales had the power to make comparisons between certain local authorities in Wales and others in England, as that would be beneficial for local authorities that are anxious to improve the effectiveness and efficiency of delivery of their public services. I support the new clause.

Don Touhig (Labour/Co-operative, Islwyn)

New clause 1 would enable the Auditor General for Wales to undertake studies involving English local government bodies for the purpose of comparison with local government bodies in Wales, but it is unnecessary. Nothing in the Bill will prevent the Auditor General for Wales from incorporating into his studies, for comparative purposes, data on English authorities collected by the Audit Commission. Indeed, the Audit Commission Act requires the commission to publish the results of its studies.

The commission, for its part, will undoubtedly equally value its ability to use data collected by the Auditor General on local government bodies in Wales for comparative purposes in England. However, as a fail-safe, the consultative provisions in the Bill have been strengthened, as a result of Opposition and Government amendments in another place. The Audit Commission and the Auditor General will now be under a mutual obligation to provide each other with information for the purpose of making comparisons

between Welsh and English local government when they are undertaking studies in accordance with their respective functions.

The Audit Commission retains the power under the Audit Commission Act 1998 to undertake cross-border studies in respect of local government bodies in England and Wales. I hope that that is acceptable to the hon. Member for Brecon and Radnorshire (Mr. Williams). Before doing so, the commission must consult the Auditor General for Wales and take account of any relevant work being done by him. The expectation is that cross-border work will involve joint working between the Auditor General and the Audit Commission, and the co-operative provisions in clause 2 are designed to achieve that.

The Bill does not, however, make cross-border working mandatory. That could unnecessarily fetter the Auditor General and other audit and inspection bodies in progressing work and, as a result, have a restrictive rather than facilitative effect. Under the arrangements, the Auditor General will have sufficient access to information relating to English local government bodies without specifically undertaking studies in respect of them. Hon. Members who served on the Committee on what is now the Health (Wales) Act 2003 will recall that we had similar discussions about the workings of the Commission for Healthcare Audit and Inspection and the health inspectorate unit in Wales, which are required to work together closely.

The hon. Members for Leominster and for Brecon and Radnorshire both talked about cross-border studies. The Audit Commission's ability to undertake such studies was emphasised as a positive in the pre-legislative scrutiny and public consultation. It ensures continuity of approach rather than a silo approach, which we all want to avoid as organisations can learn from each other. I reflect on my time as a county councillor in Gwent. The cross-border comparative studies that were undertaken among Gwent, Mid-Glamorgan, Durham and Nottingham were greatly beneficial in informing the county council and its audit family in devising and implementing policies.

The Bill fosters cross-border co-operation between the Audit Commission and the Auditor General. Having explained that, I hope that the hon. Member for Leominster will not press his new clause.

Bill Wiggin (Conservative, Leominster)

First, I thank the hon. Member for Brecon and Radnorshire for his support for the new clause. We share the concern that the Auditor General will not have the same cross-border abilities that the Audit Commission has, which the Minister said clearly in his reply is true. He also emphasised that the Auditor General would be able to use Audit Commission information, but will the Auditor General also be able to ask the commission to conduct the research that he would be able to do himself if new clause 1 were accepted? My understanding is that the Auditor General will have access to information but, if the Audit Commission were less than helpful, would not be able to conduct inquiries himself. I am sure that that will not happen, but I would be grateful if the Minister could throw some light on that.

I can see that divine inspiration is on its way to the Minister, so I will continue on one point. Is the Audit Commission as accountable to the Assembly as the Auditor General? The depth and ability of the Auditor General may be restrained, so I would be grateful if the Minister answered that question.

Don Touhig (Labour/Co-operative, Islwyn)

The Auditor General has the power to make comparisons between English and Welsh bodies. He will be able to use the information collected by the Audit Commission on English bodies to inform and facilitate his own researches, audits and investigations. The Auditor General cannot oblige the Audit Commission to obtain information on commission, but again I stress our hope, which is shared by colleagues in the Assembly, the Audit Commission and the Auditor General's office, that there will be close cross-border working so that we can deliver the best for the audit service and public bodies that are being audited in both England and Wales.

Bill Wiggin (Conservative, Leominster)

I am grateful to the Minister for that reply. As I suspected, the Audit Commission does not have to be accountable to the Auditor General. That is a shame. It would have been one of the advantages Wales might have enjoyed. Like the Minister, I am quite calm about relying on the good nature of the Audit Commission to provide the Auditor General for Wales with the information that he may need. We do not need to press this further. This is a missed opportunity but there is time before the Bill becomes law for the Government to reconsider the matter. I suspect that they will remain satisfied with the good nature of the Audit Commission.

Question put and agreed to.

Clause 42 ordered to stand part of the Bill.

Clause 43 ordered to stand part of the Bill.

Clause 44 - Studies at request of local government bodies in Wales

Bill Wiggin (Conservative, Leominster)

I beg to move amendment No. 35, in page 30, line 1, leave out subsection (2).

The clause deals with the recommendations to improve economy, efficiency and effectiveness at the request of local government bodies. Subsection (2) states that associations of employees must be consulted by the local authority before making the request for a study. To consult unions before a study, regardless of whether the study affects employees, seems unnecessary and could cause employees needless worry. Could the Minister explain the rationale behind the subsection?

Don Touhig (Labour/Co-operative, Islwyn)

Amendment No. 35 would remove the requirement for a local government body in Wales to consult appropriate associations of employees before making a request to the Auditor General for him to undertake or promote an economy, efficiency and

effectiveness study in respect of it. Consultation is existing practice and therefore the amendment would be seen as draconian. It could seriously impede the conduct of a study and, as a consequence, devalue the results. Moreover, the absence of any requirement to consult would be in stark contrast to continuing practice in England.

This measure gives employee organisations the opportunity to express views that would be valuable to the conduct of the study, even if the association had concerns over its conduct. Such concerns may in themselves be informative to the study. I think the hon. Member will agree that consultation, even where an association may not necessarily agree with its rationale, is more positive than no consultation at all. I therefore believe that the amendment would be detrimental.

Bill Wiggin (Conservative, Leominster)

The important thing is that the Auditor General may consult, and having consulted will go ahead irrespective of the results. While I agree that any consultation is better than none, this is perhaps not the tidiest bit of the Bill. It could cause employees some needless worry. However, I take the point that the purpose is to allow some consultation. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 44 ordered to stand part of the Bill.

Clause 45 - Benefit administration studies for Secretary of State

Bill Wiggin (Conservative, Leominster)

I beg to move amendment No. 36, in

clause 45, page 30, line 22, leave out 'may' and insert 'must'.

This amendment is similar to amendment No. 46 in the name of the hon. Member for Caernarfon, and would replace the word ''may'' with ''must'' in subsection (6). It would make it a requirement of the Secretary of State to publish a study of benefit administration carried out under the clause. It should be obligatory for the outcome of a study into benefit administration to be published, rather than it being left to the Secretary of State's discretion. We would be content with the discretion being with the Auditor General, but it should not be with the Secretary of State. I shall be interested to hear the Minister's justification.

Don Touhig (Labour/Co-operative, Islwyn)

Clause 45 relates specifically to benefit administration studies requested by the Secretary of State as opposed to a study that the Auditor General decides to undertake under clause 41. Amendment No. 36 would remove any discretion the Auditor General has, in conjunction with the Secretary of State, to publish a report of a study designed to improve the economy, efficiency, effectiveness and quality of performance in housing and council tax benefit administration by local councils in Wales.

In deciding whether a report requested specifically by the Secretary of State should be published, there is a need to consider its contents and the circumstances

of the study to which it relates. The report may, for instance, include information that might be helpful to fraudsters by highlighting a weakness in the benefits system. It may contain certain confidential information or identify individuals.

In practice, such reports are very likely to be published. For example, the benefit fraud inspectorate publishes reports although there is no requirement for it to do so. An absolute requirement to publish a report would be inadvisable given that studies undertaken under clause 45 are likely to be more detailed than those under clause 41. The potentially sensitive content, to which I have referred, and the fact that the study could relate to a single authority, support my arguments.

Bill Wiggin (Conservative, Leominster)

I suspect that the Minister, like me, has faith in the current Secretary of State—in my role, I have faith in at least one future Secretary of State. The purpose behind the clause is to give discretion, and I accept that avoiding fraud is essential. I am surprised that the transparency that the amendment seeks to bring about is not factored into the Bill more, but I recognise that the amendment is not necessarily the best way to do so. As we legislate, we should continue to focus on ensuring that there is proper transparency at every opportunity.

Don Touhig (Labour/Co-operative, Islwyn)

Before the hon. Gentleman considers whether to withdraw the amendment, I advise him that the Auditor General can produce more general studies relating to benefit administration under clause 41 and would have to publish that information.

Bill Wiggin (Conservative, Leominster)

That was a kind and helpful intervention. I am grateful to the Minister for the clarity with which he has dealt with the issue, and I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 45 ordered to stand part of the Bill.

Clause 46 - Performance standards: relevant bodies

Bill Wiggin (Conservative, Leominster)

I beg to move amendment No. 31, in clause 46, page 30, line 39, at end insert—

'(f) a port health authority;

(g) a conservation board;

(h) a local probation board;

(i) an internal drainage board'.

Amendment No. 31 relates to amendments Nos. 29 and 30, which we discussed earlier. It is a probing amendment, to discover why those four types of body have been excluded. Could the Minister explain why a local probation board is not included in the bodies set out in clause 46, which will be covered by clauses 47 to 49?

Don Touhig (Labour/Co-operative, Islwyn)

The amendment would extend the requirement to comply with the provisions in respect of the publication of information related to performance standards set out in clauses 47 to 49 to all the local government bodies listed in clause 12(1). The practical effect would be to require port health authorities, conservation boards, local probation boards and internal drainage boards to publish such information for comparative purposes. Extending the requirement to publish performance standards information to a range of Government bodies specified in clause 12(1) would risk imposing an unnecessary burden on comparatively small local government bodies with a limited range of functions, for which comparison may be difficult and not particularly informative.

Extending the scope of the performance standards provision in the Bill would also cut across the discretion of the National Assembly. As drafted, the clause gives the Assembly the power to add to the list of bodies not currently covered by clauses 47 to 49. There is some leeway for change in the future, as the hon. Gentleman accepted in an earlier debate, so I ask him to reflect on the amendment and to consider withdrawing it.

Bill Wiggin (Conservative, Leominster)

Ever since I entered the House I have been allergic to red tape and increasing burdens, even on Government bodies. The Minister made some valid points; as he rightly said, we have been over this ground before. I therefore beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 46, as amended, ordered to stand part of the Bill.

Clause 47 - Publication of information as to standards of performance

Bill Wiggin (Conservative, Leominster)

I beg to move amendment No. 37, in page 31, line 15, at end insert

'and may include references to standards of performance achieved by similar authorities outside Wales'.

We are going over ground that we may have covered before. The amendment relates to the publication of standards of performance by local authorities. It would enable comparisons to be made between the standards in Welsh authorities and similar authorities elsewhere in the UK, which would give access to more comparative data. The amendment would put such comparators beyond doubt, and I hope that the Minister will accept it.

Don Touhig (Labour/Co-operative, Islwyn)

After wide-ranging consultation, the Audit Commission concluded that it would not exercise its powers under sections 44 and 46 of the Audit Commission Act 1998 to require the publication of performance indicators, in recognition that it would be best to focus on the development of statutory best-value performance indicators that were set by the National Assembly under the Local Government Act 1999.

The commission has worked with the Assembly in developing a robust performance management framework for best value. The commission retains the power to require publication, however, and will keep the position under review. It is therefore appropriate to retain the powers for the Auditor General in the Bill, so as not to close off future options.

Amendment No. 37 would raise ambiguities concerning what a particular local government body regards as being a similar authority. It could be open to the Auditor General for Wales to publish his own comparisons in the form of section 41 studies, which could include comparative information available on English or other local authorities which, on an objective basis, are considered to have similar profiles. Under section 6 of the Local Government Act 1999, best value authorities must publish an annual performance plan, known in Wales as an improvement plan. The same requirement applies in England. The publication of such plans would allow cross-border comparisons if authorities so chose. For that reason, the amendment would not achieve what the hon. Gentleman intended, and I invite him to withdraw it.

Bill Wiggin (Conservative, Leominster)

I listened carefully to the Minister, but I am not quite sure that I have got what I was after in this case. Comparisons have been made by reference to the criteria of cost, economy, efficiency and effectiveness. The amendment would add the words:

''and may include references to standards of performance achieved by similar authorities outside Wales.''

I am happy to accept the Minister's criticism that the concept of ''similar authorities'' could cause some difficulty; I have always maintained that my drafting, although well intentioned, is not perfect. However, the purpose behind the amendment is to ensure that people do not invent their own standards. The references to the criteria of cost, economy, effectiveness and efficiency suggest that that is what the Government want: they want proper comparison and standards, and they are right to do so. However, unless comparisons are made outside Wales, the Auditor General's job will be more difficult.

As I said earlier, I believe that the Auditor General will have access to information from the Audit Commission, so it should be possible for him to carry out those comparative studies. I hope that the Minister will tell me that that is what will happen—and once that is on the record, his statement can stand instead of my amendment.

Don Touhig (Labour/Co-operative, Islwyn)

As I said, it would be open to the Auditor General for Wales to publish his own comparisons, in the form of section 41 studies. That could include the comparative information available on English or other local authorities. I think that that addresses the point made by the hon. Gentleman. The facility is there for the Auditor General to do so, but we do not believe it to be appropriate to accept the amendment, for the reasons that I gave.

Bill Wiggin (Conservative, Leominster)

I am grateful to the Minister for his answer. Given that the Auditor General will wish to make comparisons with similar authorities elsewhere, we do not need to press the amendment to a vote. I hope that that is how things will proceed, although there is always the possibility that the Auditor General may choose to do something completely different; he has the flexibility to do so. However, the Minister's criticism of my amendment suggests that it might not address that eventuality, so I beg to ask leave to withdraw it.

Amendment, by leave, withdrawn.

Clause 47 ordered to stand part of the Bill.

Clause 48 - Permitted methods of publishing information under section 47

Bill Wiggin (Conservative, Leominster)

I beg to move amendment No. 38, in page 32, line 5, at end insert—

'(2A) The relevant body may publish the information electronically in any way which is accessible by local government electors of the body.'.

Clause 48 is concerned with the methods of publishing information about standards and performance under clause 47. The amendment would insert a new subsection to allow local authorities to publish information electronically. I am aware that the drafting of the clause is based on the Audit Commission Act 1998, and it is surprising that although that Act is hardly more than five years old, it does not refer to electronic publishing. I do not see any danger in allowing electronic publishing, so I wait with excitement to see what the Minister will have against this constructive amendment.

Don Touhig (Labour/Co-operative, Islwyn)

Shall I e-mail the hon. Gentleman?

Bill Wiggin (Conservative, Leominster)

E-mail the whole Committee.

Don Touhig (Labour/Co-operative, Islwyn)

Clause 48 sets out the way in which a relevant body is permitted to publish information required by a direction made under clause 47—by publication

''in a newspaper which is—

(a) printed for sale, and

(b) circulating in its area.''

Amendment No. 42 would enable a body to publish information on standards of performance electronically in a way that is accessible to its electors. It would also, however, give the body the option of using the electronic medium instead of a local newspaper, not simply as an additional means of communication.

Electronic communication through e-mail and the internet has made huge advances in recent years. However, there is still not universal access to the internet, and publication in a newspaper is still the most reliable way of making information available to electors. There is nothing in the Bill to prevent local government bodies from using electronic methods of publication in addition to the method of publication already permitted by the clause. That would not

require an amendment to the Bill.I am sympathetic to the aim of disseminating information as effectively as possible through the use of information technology, but at this stage, its use as the sole means of communication is premature.

Bill Wiggin (Conservative, Leominster)

I am sorry to hear that the Minister has such a downer on electronic communication. One of the Achilles heels in this debate is the ''printed for sale'' element. If we are talking about releasing information, we must keep our eye firmly on the ball: not everybody will want to pay for that information. The amendment was a constructive way of allowing it to be accessible without charge. The point that the Minister made about not everybody having access to the internet is fair, and I suspect that probably the best thing to do now is to leave the matter with the Government and hope that they will amend the Bill in their own time.

Don Touhig (Labour/Co-operative, Islwyn)

May I help by clarifying things a little further? By ''permitted methods of publication'', clause 48 does not mean that no additional means are permitted; it simply means that publication by the permitted method is a mandatory minimum. I hope that that helps the hon. Gentleman. He will recognise that, as the e-Minister, I would not want to close the door on new technology, but we must recognise that such technology is not universally available. Local authorities publish many things in local newspapers, and that is often the most effective way of getting information out to their electorate.

Bill Wiggin (Conservative, Leominster)

That is helpful. I know that the Minister surfs my website regularly, and has made many comments about it. He will recall that he teased me mercilessly for not having a picture of my leader on it.

Chris Ruane (Labour, Vale of Clwyd)

Which one? There are so many.

Bill Wiggin (Conservative, Leominster)

I now have a picture of my right hon. and learned Friend the Member for Folkestone and Hythe (Mr. Howard) on it. When I had the photograph taken, I mentioned it to him, to which he replied that the Minister was welcome to have his photograph taken with the Leader of the Opposition and put it on his website, for all the good it would do him. That was a generous offer.

Don Touhig (Labour/Co-operative, Islwyn)

We welcome Leaders of Opposition parties to my parliamentary constituency. When the leader of Plaid Cymru came to my constituency there was a 37 per cent. swing to Labour in a council by-election. Please come.

Bill Wiggin (Conservative, Leominster)

That is a dangerous but generous offer from the Minister. As the Leader of the Opposition is Welsh, he may well have visited, and will visit again. I am sure that the local people will look forward to that with great excitement, as perhaps they did not when previous leaders of other parties have visited.

Returning to the amendment, I take the Minister's point and I hope that the information will be published electronically as well, because that will give greater transparency and will allow those who have access to

the internet to find the information that they need more easily. We have now exhausted the issue, so I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 48 ordered to stand part of the Bill.

Clause 49 and 50 ordered to stand part of the Bill.

Schedule 1 - Best value audit and inspections

Win Griffiths (Labour, Bridgend)

With this it will be convenient to discuss amendment No. 40, in schedule 1, page 46, line 24, leave out

', and in deciding whether to do so,'.

Bill Wiggin (Conservative, Leominster)

Amendment No. 39 would delete subsection (4) of proposed new section 2A of the Local Government Act 1999. That section, which appears in paragraph 3 of schedule 1, deals with the best value audit for Wales. This is a probing amendment to find out how the Government think that it will work in practice to exempt certain best value authorities from a functional duty. Amendment No. 40 would delete the words ''and in deciding whether to do so'' from subsection (4) of proposed new section 4A, as inserted by paragraph 9.

The wording implies that the Auditor General has the choice of whether to carry out an inspection of a best value authority, but under subsection (2), the Secretary of State may direct him to carry out an inspection, with which the Auditor General must comply. How, therefore, can the Auditor General have the choice to decide whether to do so, when he is under a compulsory direction?

Don Touhig (Labour/Co-operative, Islwyn)

Amendment No. 39 relates to the Auditor General's functions under the Local Government Act 1999 in respect of best value authorities in Wales under the Wales programme for improvement, to which I referred earlier. The amendment would prevent the Assembly from exempting by order a best value authority from certain requirements under the programme for improvement. That would take away a power that is available to the Assembly under the Local Government Act. As I understand it, the exemption is not in the sense of a relaxation of best value authority responsibilities. The power would be exercised if the Assembly had fundamental doubts about the exercise of a function by a best value authority and was contemplating making alternative arrangements. The Assembly has not had cause to exercise the power, but that does not detract from its validity and the Assembly's desire to

maintain it. I trust that the hon. Gentleman agrees that it would not be appropriate to limit the Assembly's powers in this way.

Under amendment No. 40, the Auditor General would not be required to have regard to a recommendation by the best value authority's auditor, or to Assembly guidelines, in reaching a decision on whether to undertake an inspection of a best value authority's compliance with the requirements of the Local Government Act. However, he would be required to have regard to those matters in undertaking an inspection. It is equally appropriate for him to take account of an auditor's recommendation and guidance in coming to a decision on whether to undertake an inspection, as is currently the case.

The hon. Gentleman asked, in particular, how the Auditor General can decide whether to carry out an inspection, because the Secretary of State can direct him to do so. The Auditor General may decide himself to carry out an inspection, or be directed to do so by the Secretary of State. The option is there. Following that explanation, I hope the hon. Gentleman feels comfortable about withdrawing the amendment.

Bill Wiggin (Conservative, Leominster)

We have dealt with the fact that the Auditor General may himself decide to investigate, or may be ordered to do so by the Secretary of State. I suspect that if the Secretary of State orders it, he must do so and cannot make his own decision not to. That is fine.

Amendment No. 39 is designed to find out why the National Assembly for Wales would exempt an authority. The Minister said that that is one of its powers, which is right, and that the amendment would undermine that. However, before I withdraw the amendment, I would like to know why the Assembly should ever want to exempt an authority. I am sure he will be able to tell me now.

Don Touhig (Labour/Co-operative, Islwyn)

As I understand it, this is not an exemption in the sense of a relaxation of the best value authority's responsibility. The power would be exercised if the Assembly had fundamental doubts about the exercise of a function by a best value authority and was contemplating making alternative arrangements. The Assembly has not had cause to exercise that power, but it should not be removed because it is valid and may be needed at some point.

Bill Wiggin (Conservative, Leominster)

I am happy with that and grateful to the Minister for his reply. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Schedule 1, as amended, agreed to.

Clauses 51 to 53 ordered to stand part of the Bill.

Column Number: 56

Restriction on disclosure of information

Don Touhig (Labour/Co-operative, Islwyn)

I beg to move amendment No. 50, in page 35, line 25, leave out '145B or'.

Win Griffiths (Labour, Bridgend)

With this it will be convenient to discuss Government amendment No. 51.

Don Touhig (Labour/Co-operative, Islwyn)

Due to the discussions that we have had right from the beginning of consideration—through pre-legislative scrutiny to Second Reading—I have no doubt that clause 54 is the part of the Bill that will exercise a great deal of interest. What the Government seek to do through the amendments might help to assuage some fears that have been expressed about the clause's ability to prevent disclosure of information.

The Government have worked to achieve consistency in the treatment of section 49 of the Audit Commission Act 1998 and clause 54. The clause will apply the restriction on disclosure of information to value-for-money studies undertaken at the request of education bodies under proposed new section 145B of the Government of Wales Act 1998, which we touched on earlier. Studies in respect of such education bodies are not covered by section 49 of the Audit Commission Act and the amendments will bring the provisions into line. As the studies are at a body's request, the release of information will be governed by the normal laws of confidentiality and the terms of the agreement between the parties.

Bill Wiggin (Conservative, Leominster)

I rushed off to get the Government of Wales Act 1998, but I could not find section 145B. I can find section 45(6)(b), but that does not fit with the line of argument. When was the Act amended and what is the correct wording?

Don Touhig (Labour/Co-operative, Islwyn)

I think the hon. Gentleman is confused because section 145B is a proposed new section to be inserted by the Bill in the Government of Wales Act. That is why it is not there yet.

Win Griffiths (Labour, Bridgend)

I think everybody is happy now.

Amendment agreed to.

Amendment made: No. 51, in clause 54, page 35, line 39, leave out '145B(3) or'.—[Mr. Touhig.]

Question proposed, That the clause, as amended, stand part of the Bill.

Bill Wiggin (Conservative, Leominster)

This is the most contentious part of the Bill. We call for the deletion of the clause as it restricts the disclosure of information and issues criminal sanctions for non-compliance. As I said on Second Reading, we are aware that the Government are unhappy with the clause and have gone some way to amend it, but such amendments and assurances have not gone far enough to ensure the protection of whistleblowers, who should not feel intimidated and unsafe in a free society.

In expecting us to trust them that clause 54 will be amended once section 49 of the Audit Commission Act is amended in line with the Freedom of Information Act 2000, the Government must believe that we would

never expect them to make a U-turn. However, they know as well as we do that that is by no means a certainty. I am surprised that the Liberal Democrats think it acceptable to agree to such a controversial and worrying clause on the Government's word. Discussing clause 54 on Second Reading, the hon. Member for Montgomeryshire (Lembit Öpik) said:

''I am optimistic about the Government's willingness to alter that . . . I trust them on the matter and can envisage no reason why they would renege on something for which they have accepted the arguments''. —[Official Report, 17 June 2004; Vol. 422, c. 943.]

I am surprised and disappointed that the Liberal Democrats have given up on this clause so easily, and I am sure that whistleblowers throughout Wales and those who believe in a free society will be too. The Conservatives, however, will maintain pressure on the Government to delete it because we need to know how the Audit Commission Act and then the clause will be amended before this Bill is enacted.

The conduct of locally elected authorities must be transparent and totally above board. The restriction of disclosure in the clause implies that a body with something to hide must be protected from the public. We maintain that it is wrong in principle to apply criminal sanctions for the disclosure of information. I am concerned that the provision for criminal sanctions will deter whistleblowers from disclosing information on issues other than those exceptions in subsection (2) on local government audit for fear of being treated more harshly than for disclosure relating to any other public sector audit.

Will the Minister tell the Committee under what circumstances the Government consider criminal sanctions appropriate for the disclosure of information? On Report in the other place, Lord Evans of Temple Guiting said that

''the Government are worried about the clause and wish to solve the problem. As I described, the only way to solve it is to place before both Houses towards the end of the year an order that gives us, we hope, the result that I suspect that we all want.''—[Official Report, House of Lords, 1 April 2004; Vol. 659, c. 1480.]

What is the end result that the Government want? If it is that there is no restriction on the disclosure of information relating to local government audit, they must amend both the Freedom of Information Act and section 49 of the Audit Commission Act before this Bill is put on the statute book. Otherwise, they must agree to delete clause 54. If they placed a bar on the clause being brought into force, that would at least prevent the anomaly of there being, for a short time, different law on the statute book, as the amendments would not have been accepted.

Will the Minister tell us whether there is a precedent for a Bill being passed on a promise that it will be amended once on the statute book? As it stands, we cannot leave this unacceptable clause in the Bill on such a promise. We need certainties about potential changes, which I hope he will give us. If not, the clause should not stand part of the Bill.

Hywel Williams (Plaid Cymru, Caernarfon)

In another place, on behalf Plaid Cymru, Lord Elis-Thomas noted the anxiety that has been expressed about the clause and its potential impact. I have taken heed of the Minister's assurances given on Second Reading and I am sure that he will tell

us today that there is a strong probability that the Government will act in the way he described. The clause would act as a disincentive for whistleblowers, so I am interested in what he has to say now.

Roger Williams (Liberal Democrat, Brecon and Radnorshire)

We, too, have great concerns about clause 54, and my hon. Friend the Member for Montgomeryshire has asked the Government for greater assurance that their amendments will protect whistleblowers. We are not yet convinced that their amendments will protect whistleblowers to the extent that we want.

Don Touhig (Labour/Co-operative, Islwyn)

I am conscious that clause 54 has been the most contentious part of the Bill since pre-legislative scrutiny and our giving of evidence to the Welsh Affairs Committee, when it was clause 50 in the draft Bill.

Hon. Members will know that I do not want to be partisan in any way, and I take no personal issue with the hon. Member for Leominster, but I find it difficult to understand the Conservatives. When, as a Back Bencher, I introduced a Bill to protect whistleblowers, the hon. Gentleman's party and Government did everything they could to wreck it and succeeded, but now they are the whistleblower's friend. However, like St. Paul on the road to Damascus, a conversion will benefit us all, and we welcome the hon. Gentleman's conversion to protecting the interests of whistleblowers.

Clause 54 restricts the disclosure of information obtained during a local government audit or study by an auditor or the Auditor General, albeit with widely cast exceptions. Clause 54 is an equivalent provision to section 49 of the Audit Commission Act. Hon. Members may remember that on Second Reading I referred to clause 54(2), which lists a number of exceptions to restrictions on disclosing information, and I have written to a number of right hon. and hon. Members on the matter in recent months. The exceptions in the Bill that permit disclosure cover matters relating to best value, fraud, the work of the ombudsman, the discharge of social service functions—an important issue that caused recent media interest—education, best value, social landlords and crime.

The Welsh Affairs Committee, the National Assembly for Wales and the Auditor General recommended that the clause should be deleted, but the Audit Commission and the Welsh Local Government Association argued for it to be retained because it provides a safeguard against the inappropriate or premature release of information.

As I said on Second Reading, I fully understand that there should be no impediment to the legitimate disclosure of information. The Freedom of Information Act is clear evidence of the Government's commitment to that cause. As we debated this morning, the Government consider that there should not be undue inconsistency between England and Wales in the criminal law on the inappropriate release of information. That would be the case if clause 54

were deleted and section 49 of the Audit Commission Act remained in force—a matter would not be an offence in Wales but would be in England.

The Government have listened to the concerns expressed during pre-legislative scrutiny and by Opposition parties and others in the House and the other place during the Bill's passage, and we have made amendments to clause 54. They will enable the Bill to be amended further after enactment to reflect the outcome of a general review undertaken by the Department for Constitutional Affairs under the Freedom of Information Act of existing statutory bars to the disclosure of information.

The Government have announced their intention to amend section 49 of the Audit Commission Act as a result of the review. I made a ministerial statement to that effect, which was laid before both Houses of Parliament on 24 March. The amendment will overturn the existing presumption in section 49 against disclosure, and change it to one in favour of disclosure, which we all wish to see and is wholly consistent with the spirit of the Freedom of Information Act. The amendment will be made by order before the end of the year. A comparable amendment should then be made to clause 54 once the Bill is enacted. It is not possible to link the two amendments in the order, but they will run parallel, and both seek the same objective.

Freedom of information legislation is complex and it would be inappropriate for me to pre-empt the detailed drafting of the section 75 order that will carry into effect the pledge that I gave on Second Reading and am repeating today. That said, the practical effect of the proposals is that information obtained by the Audit Commission or an auditor during the course of an audit or study, and held by any public authority, could be disclosed by that public authority in the spirit of the Freedom of Information Act. Where the same information is held by any organisation not subject to the Act, it would also be entitled to disclose it subject to a limited number of exceptions. At present, such information is subject to an absolute exemption from disclosure under the Act.

A person or body would be able to make a formal request to any public authority for information under the provisions of the Freedom of Information Act. The presumption in favour of permitting disclosure by a public authority or its staff would not be limited to formal requests for information under the Act. Section 75 orders allow for ancillary provisions and it is proposed that the amendment to section 49 would also cover the voluntary release of such information—proactive disclosure—not related to formal requests, provided it was not inappropriate.

On Second Reading, I undertook to give right hon. and hon. Members any additional information I could on work being undertaken to amend the clause. I can now reveal to the Committee that the Government have agreed to drop the imprisonment sanction from section 49 of the Audit Commission Act. That also means that it can be deleted from clause 54 once the

Bill is enacted. I cannot give firm details as to when that will be done because the Government need to give further consideration to the matter, but it will be at the earliest opportunity. We all feel that if we change the presumption of the clause from being against to in favour of disclosure, it would be inappropriate to have the same degree of sanction for any breach—perhaps a fine might be more appropriate.

It is not entirely clear whether our intention can be accomplished through the section 75 order. However, I hope that that demonstrates the Government's determination to make clause 54 as open and proportionate as possible, but in a structured way. It has been said that much has been taken on trust in respect of future amendments to the clause. However, the record of our proceedings in this and previous debates will be there for all to see and I would not give undertakings if the Government were not committed to taking the matter forward, as I explained.

Several points were made in our brief debate. The hon. Gentleman said that clause 54 is dangerous for whistleblowers; as I said on Second Reading, the Auditor General is a prescribed person for the purposes of the Public Interest Disclosure Act 1998, which was based on a Bill that I introduced, which was thwarted by the Conservatives when they were in office. Genuinely concerned whistleblowers can make information available to the Auditor General without breaching anything in clause 54, which promotes only the disclosure of information obtained by the Auditor General or an auditor. A local government whistleblower could disclose other information in his or her possession related to the finances of the authority without breaching the clause.

The hon. Member for Leominster asked whether there was a precedent for a Bill being passed on the premise that it will be amended. I am not sure whether there is such a precedent; the Government are not afraid to seek innovative solutions to problems, and I believe that the solution that we propose will satisfy everyone if it can proceed as the Government have pledged that it will.

I hope that the fears of hon. Members on both sides of the Committee will be assuaged with those few remarks. The Government are determined to make the appropriate amendments.

The hon. Gentleman was concerned about the Bill being enacted, and the amendments to section 75 orders not being made. I remind him of a point that I made on Second Reading: clause 22 deals with immediate and other reports of a public interest. Clause 22(1) states:

''In auditing accounts of a body under this Chapter, an auditor must consider whether, in the public interest, he should make a report on any matter which comes to his notice in the course of the audit, in order for it to be—

(a) considered by the body, or

(b) brought to the attention of the public.''

Subsection (3) makes the position clear. It states:

''If the auditor considers that the public interest requires the matter to be made the subject of an immediate report, he must make the report immediately.''

Having said all that about the ''sanctions'' in clause 54 until it is amended, there is still the fall-back position that if an auditor believes that there is a matter to be made public in the public interest, he or she has the power to make that information available. I hope that hon. Members' fears have been assuaged. I am asking the House of Commons to take the Government on trust, but I would not have said what I did if we were not determined to implement the proposals.

Bill Wiggin (Conservative, Leominster)

I am grateful to the Minister for what he said, especially about removing imprisonment from the list of sanctions. I am aware that he is the whistleblowers' friend from his history. As I understand it, he said that his intention to drop the imprisonment sanction may not be possible to carry out under a section 75 order. I accept that the Minister has set himself quite a challenge, but he has the opportunity before Third Reading to ensure that the Committee knows whether it will be possible for him to do what he said he would. Therefore it is not appropriate for us to press the amendment to a Division. What the Government have done is extremely constructive; I recognise that they also want transparency and clarity in the Bill. I am grateful that we have made some progress today. The idea that the Liberal Democrats were quite so compliant came from the following remark by the hon. Member for Montgomeryshire (Lembit Öpik) on Second Reading:

''Perhaps I am simply an optimist or willing to trust the Minister because he has an honest face''.——[Official Report, 17 June 2004; Vol. 422, c. 943.]

We should trust the Minister because he repeatedly said that he would do something, rather than because of the honesty of his face. We should wait and see whether it can be done. It would be of great comfort to the Committee if the Minister could write to us about the section 75 orders.

Don Touhig (Labour/Co-operative, Islwyn)

If it helps the hon. Gentleman and other hon. Members, I said on Second Reading that if I had any further information when we reached consideration in Committee, I would reveal it. I have kept that promise: I have been able to reveal that the Government are considering the removal of the prison sanction for any breach of the clause. By Report, or Third Reading, if I have further information on how we will take this forward—with or without a section 75 order—I will ensure that hon. Members are made aware of it.

Bill Wiggin (Conservative, Leominster)

I am grateful to the Minister for his reply, and do not want him to row back from what he has already said today. It is fair to say that there is a question mark over how the Government will proceed. It is important, while we scrutinise the Bill, that we do our best to nail down what will happen. I know that the Minister will provide us with that information if he can, but I want to put the marker down that we will need that information if we are to support the Bill. Otherwise, we will be faced with the extraordinary situation in which, for a period of time, the rules in Wales will be different from the way that the Government want them to be. When the amendments to the other pieces of legislation then go through—

again, the Committee has not seen how those amendments will be worded—there will be a complete change in the nature of the Bill. It is therefore important that we get as much information as we can. I know that the Minister is doing everything that he can, and I am grateful for that. I hope that he will continue to keep us fully informed on the mechanics of the matter.

Don Touhig (Labour/Co-operative, Islwyn)

It is not intended that the Bill—assuming that Parliament approves it—should be enacted until 2005. I am not being complacent about the amount of time left, but we hope to have sufficient time to introduce the amendments that I suggested.

Question put and agreed to.

Clause 54, as amended, ordered to stand part of the Bill.

Clause 55 ordered to stand part of the Bill.

Clause 56 - Publication of information by Auditor General for Wales

Don Touhig (Labour/Co-operative, Islwyn)

I beg to move amendment No. 52, in page 36, line 42, leave out '(1)(b), (c) or (d)' and insert '(1)(a), (b) or (c)'.

The amendment corrects a typographical error in clause 56(2)—[Interruption.] Unfortunately we cannot get the proofreaders these days. The subsection should read:

''The information that may be published under subsection (1)(a), (b) or (c)''

and not ''(1)(b), (c) or (d)'', as currently drafted. The exclusion should relate only to information about public interest reports, and not to information about contraventions of the accounts and audit regulations to be made under clause 39. It is consistent with the provisions of sections 51 and 12 of the Audit Commission Act 1998. I commend the amendment to the Committee.

Amendment agreed to.

Clause 56, as amended, ordered to stand part of the Bill.

Clauses 57 to 59 ordered to stand part of the Bill.

Clause 60 - Meaning of ''Welsh NHS body''

Win Griffiths (Labour, Bridgend)

With this it will be convenient to discuss the following:

New clause 2—Prevention of unlawful expenditure—

'If the Auditor General for Wales has reason to believe that a Welsh NHS body or an officer of such a body—

(a) is about to make, or has made, a decision which involves or would involve the incurring of expenditure which is unlawful;

(b) is about to take, or has taken, a course of action which, if pursued to a conclusion, would be unlawful and likely to cause a loss or deficiency,

he shall refer the matter forthwith to the Assembly.'.

Bill Wiggin (Conservative, Leominster)

The new clause concerns the audit regime for NHS bodies in Wales. We welcome the fact that the Government have not simply copied the existing arrangements for health bodies, as they have done for most of the Bill, but have instead given the Auditor General fuller auditing responsibilities in the audit regime. However, some useful existing provisions have been excluded.

Under the existing legislation the health body auditor is allowed to act if he believes that unlawful expenditure is about to be incurred and needs to be looked into. The auditor can carry out an extraordinary audit, and the Secretary of State can call for one. Those provisions prevent problems from getting out of control. However, there are no such useful provisions in the Bill with regard to health bodies. That sets up differences between not only England and Wales but between health bodies and local authority bodies in Wales. The amendment is a version of section 19 of the Audit Commission Act 1998, which would restore the current position for health bodies.

Don Touhig (Labour/Co-operative, Islwyn)

New clause 2 would require the Auditor General to refer any matter relating to unlawful or potentially unlawful expenditure on the part of a NHS body in Wales to the National Assembly. The Government believe that it is unnecessary for the following reasons. Clause 60 gives the Auditor General statutory responsibility for the financial audit of Welsh NHS bodies. His statutory responsibility would be the same as it is now for the National Assembly and its sponsored bodies. The audit process that applies would also be the same.

An item of public expenditure would result in a qualification to an NHS body's accounts as it does now to other bodies for which the Auditor General has statutory audit responsibilities. He would publish a report in respect of the qualification and lay the report before the National Assembly.

In accordance with Standing Order 12.5, the Audit Committee of the National Assembly would meet to consider the circumstances surrounding the qualification. In doing so, it would take evidence from relevant officials with financial accountability responsibilities. The Committee would issue a report with its conclusions and recommendations, to which the Assembly Administration, in liaison with the NHS body concerned, would be required to respond within a set time scale, currently 30 working days.

Any potentially unlawful expenditure or unlawful decision would, as a matter of course, be brought to the attention of the NHS body's accountable officer and the National Assembly accounting officer for the NHS in Wales. With that explanation, the hon. Gentleman may feel that his new clause is not needed.

Bill Wiggin (Conservative, Leominster)

I am grateful to the Minister for his reply. If he is satisfied that an order to prevent illegal expenditure is not necessary, I hope that he is right. I do not wish to press the matter any further, but it is an important point to make during the drafting of the Bill. I feel that I have fulfilled my role in drawing it to the Committee's attention.

Question put and agreed to.

Clause 60 ordered to stand part of the Bill.

Clauses 61 to 66 ordered to stand part of the Bill.

Schedule 2 - Minor and consequential amendments

Don Touhig (Labour/Co-operative, Islwyn)

Amendment No. 44, which would affect the Audit Commission Act, would require the Audit Commission to co-operate with the Auditor General, where appropriate, for the efficient and effective discharge of the latter's functions in respect of undertaking studies under clauses 41 and 42. The Bill gives the Auditor General and the Commission various reciprocal duties to co-operate, as we have discussed earlier. It requires them to co-operate in respect of studies that they would initiate themselves, under clauses 41 and 42 and under sections 33 and 34 of the Audit Commission Act respectively.

Those duties are contained in clause 43, and paragraph 34 of schedule 2—the provision that would be subject to amendment. In those provisions, the requirement to co-operate rests with the initiator of the study. The intention is that, in proposing a study, each would consult and co-operate with the other in terms of timing, exchange of relevant information and the potential for joint working in so far as they consider it necessary and appropriate.

The Bill also gives a mutual duty to the Auditor General for Wales and the Audit Commission to provide each other with any information that they reasonably require to make comparisons between English and Welsh bodies when undertaking studies of those bodies. That provision was inserted in another place after representations from the Opposition parties and was found to be quite helpful. The duty is in clause 57, and paragraph 34 of schedule 2.

The Government have not imposed a duty on the Audit Commission and the Auditor General to co-operate with each other's studies other than by the exchange of information. Our firm expectation is that

regulatory and audit bodies such as the commission and the Auditor General will collaborate closely on work of cross-border interest. The Bill encourages them to do so, and the evidence submitted by both parties during pre-legislative scrutiny of the draft Bill demonstrated a clear willingness to do so. However, a duty would create operational difficulties in matters such as forward work planning, and could ultimately have a restrictive effect.

The hon. Gentleman touched again on cross-border duties. Logically, a duty for the Audit Commission would require a reciprocal duty for the Auditor General in respect of commission work, which could fetter the latter's discretion to organise the work as he sees fit. I hope that the hon. Gentleman is content with that explanation.

Bill Wiggin (Conservative, Leominster)

I am grateful to the Minister for his reply. This is a missed opportunity and a waste, but it is not a critical missed opportunity, so there seems little purpose in pushing the Government further at this stage, although with hindsight it would have been helpful if the duty had been included. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Schedule 2 agreed to.

Clauses 67 and 68 ordered to stand part of the Bill.

Schedule 3 agreed to.

Clause 69 ordered to stand part of the Bill.

Clause 70 - Welsh NHS bodies

Bill Wiggin (Conservative, Leominster)

I beg to move amendment No. 42, in page 41, line 24, leave out subsection (2).

This probing amendment would delete clause 70(2), which deals with transitional provisions. The amendment is designed to find out the length of current appointments of local authority auditors under the Audit Commission Act 1998 before new appointments are made under clause 13. I seek an assurance from the Minister that the purpose of the Bill, which is to put the Auditor General in charge of local authority audits in Wales, cannot be frustrated.

Don Touhig (Labour/Co-operative, Islwyn)

The amendment would remove continuity of audit arrangements in the transition to the new arrangements under the Bill. Clauses 69 and 70 provide for appointments of auditors already made by the Audit Commission for local government bodies and NHS bodies in Wales to remain in force when the Bill comes into force. The appointments will continue in force until they expire under their own terms. From the date of the relevant provisions of the Bill coming into force, existing local government-appointed auditors will be regarded as having been appointed by the Auditor General. Existing NHS-appointed auditors will be regarded as exercising the statutory audit functions of the Auditor General. That is a sensible and pragmatic arrangement. It will provide

client bodies with continuity and avoid any contractual difficulties that may arise through the early termination of appointments.

Under the amendment, existing contracts would have to end when the Bill came into force. The Auditor General would have to undertake an extensive, costly and time-consuming procurement exercise to make new appointments, potentially of the same auditors, to take effect on the first day of the Wales Audit Office's operation. That would be on top of other preparatory work required to ensure that the office runs effectively from the outset. Therefore, I hope that the hon. Gentleman will consider withdrawing the amendment.

Bill Wiggin (Conservative, Leominster)

The Minister will recognise that we do not wish the Auditor General to be frustrated by existing auditors. As long as he is confident that that will not happen, I am content. It is important that existing auditors continue in the form that he outlined. I recognise the inadequacy of the amendment, but I emphasise that it was a probing amendment to find out whether the Auditor General would be frustrated. The Minister has assured me that he will not, so I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 70 ordered to stand part of the Bill.

Clauses 71 and 72 ordered to stand part of the Bill.

Schedule 4 agreed to.

Clauses 73 and 74 ordered to stand part of the Bill.

Clause 75 - Short title

Don Touhig (Labour/Co-operative, Islwyn)

I beg to move amendment No. 53, in page 42, line 18, leave out subsection (2).

This is the amendment always required when a Bill starts its passage in another place. It removes the privilege amendment, which is routinely inserted in another place to avoid encroachment on the privilege of those in this House to control charges on public funds. A money resolution was passed immediately after Second Reading in this House on 17 June. Thus the Commons have exercised their privilege and the subsection is no longer needed.

Amendment agreed to.

Clause 75, as amended, ordered to stand part of the Bill.

New Clause 3 - Power to send for persons

Hywel Williams (Plaid Cymru, Caernarfon)

I beg to move, That the clause be read a Second time.

The Committee will know of my keenness to ensure that the Audit Committee of the National Assembly is kept as fully informed as possible, and can be as effective as possible. The new clause aims to ensure that the Audit Committee can require anyone

''relevant to a report submitted by the Auditor General . . . to attend the Audit Committee, give evidence and produce documents as required.''

That is a sensible step that will enable the Committee to carry out its functions properly. I have no doubt that in the ordinary course of events, such a power would not be needed or used. However, it should be there if so needed. Furthermore, it would be indicative of the importance that the Government and the National Assembly attach to the work of the Audit Committee. As I said earlier, the Audit Committee has worked co-operatively on a cross-party basis, and has already saved the Welsh taxpayer about £90 million.

The new clause would amend section 74 of the Government of Wales Act 1998 and allow the Audit Committee to call people who are relevant to a report submitted by the Auditor General for Wales to the Audit Committee. It would allow the body accountable for auditing in the Assembly to follow the money to its end point. Being able to call witnesses is an important power of the Public Accounts Committee, and I am sure that no hon. Members would want that power to be taken away. The Audit Committee needs a similar power to do its job properly.

I also note that the Public Accounts Committee retains responsibility for some areas of expenditure in Wales, can call witnesses and can have access to documents in London, but the Audit Committee in Cardiff carrying out a similar function cannot do so. The body charged with auditing expenditure on devolved matters does not have the power to call witnesses to Cardiff, which is unjustifiable. I seek reassurance from the Minister about the importance that the UK Government attaches to the Audit Committee in Cardiff, and to enabling it to do its work properly.

Don Touhig (Labour/Co-operative, Islwyn)

The intention of new clause 3 appears to be to give the Assembly's Audit Committee the power to require a wider class of persons to attend to give evidence and produce documents. That power would be limited only by the requirement that the person's attendance be relevant to the Auditor General's report that the Audit Committee is considering.

Under the present section 95 of the Government of Wales Act 1998, which deals with the Auditor General's existing right of access to documents and information, the Auditor General is entitled to all documents relating to the accounts of any relevant person. For example, if the Auditor General is conducting an audit of a body mentioned in schedule 5 to the Government of Wales Act, the documents

relating to that body's accounts may or may not be in the hands of a person who is a member of or a member of staff of that body.

Section 74 of the Government of Wales Act permits the summoning only of persons who are members of or members of staff of bodies or offices mentioned in schedules 4 and 5 of that Act. Consequently, there is already a difference between the categories of persons who may be holding or controlling a relevant document and the categories of persons who may be summoned to appear before the Audit Committee. That is because the Audit Committee is principally concerned with having before it the relevant members or members of staff of the body about which the Auditor General for Wales has prepared his report, so that those persons can be questioned on the report.

I echo what the hon. Member for Caernarfon said about the fact that the work of the Audit Committee in the Assembly has been first class. We recognise that, and there are lessons to be learned for government throughout the United Kingdom from the openness and transparency with which things have been done in Cardiff. We could all reflect on the benefits of that in a wider context.

Extending the Audit Committee's power as the new clause proposes may result in an increased regulatory burden. Having already been subject to the wider powers of access of the Auditor General, a person may become subject to attendance before the Audit Committee. The attendance of witnesses is covered by National Assembly Standing Orders, and I suggest to the hon. Gentleman that that is the most appropriate way of dealing with the issue. My understanding is that there have been no problems in practice.

I do not want to seem as if I am dismissing the valid points raised by the hon. Gentleman, but before considering the new clause, it would have to be demonstrated to me that there is a problem in the existing operation. I am not satisfied that such a problem exists, so I invite him to withdraw the new clause.

Hywel Williams (Plaid Cymru, Caernarfon)

I take the Minister's point, although I already said that problems would not arise in the ordinary course of events, and I was glad to hear his words about the value of the Committee's work. On the basis of those two points, I beg to ask leave to withdraw the motion.

Motion and clause, by leave, withdrawn.

Question proposed, That the Chairman do report the Bill, as amended, to the House.

Don Touhig (Labour/Co-operative, Islwyn)

I thank you, Mr. Griffiths, on behalf of all members of the Committee, for the excellent way in which you have chaired today's proceedings. The fact that we have completed our deliberations by four o'clock is down to your patience, guidance and good humour. I should also like to thank all members of the Committee for their contributions. We have had a good standard of debate.

Opposition Members made an important contribution to the smooth running of the process. The hon. Member for Leominster has done sterling work

and has been up to the task. The information I was able to impart about the Government's intention to seek to remove the prison sanction for a breach of clause 54 will enable him to face his colleagues in the other House; he has gained as much by probing and pressing as they did.

The hon. Members for Caernarfon and for Brecon and Radnorshire also made important contributions. We have completed our deliberations in record time. My especial thanks go to my hon. Friends for their contribution in speeding up the process and ensuring that we have completed our business. I also extend my thanks to the Doorkeepers. I am sure that they are pleased that ensuring that the doors were locked for Divisions proved not to be too great a task. My thanks go also to the police, the Clerks and the Officers for helping us carry out our business today.

We have gone through the Bill fairly quickly, but there have been good speeches and good debates. That demonstrates the value of pre-legislative scrutiny. A great deal of work had already been done in the pre-legislative stage, which helped the Government to make changes and amendments to the Bill before it came before us for final consideration. We all recognise the value of that. It is down to us. Certainly the pre-legislative scrutiny carried out by the Welsh Affairs Committee on Wales-only Bills has been of great value to us all in ensuring that we make better legislation.

Our warmest thanks go to you, Mr. Griffiths. I do not know if we will sit under your chairmanship again before you retire—perhaps you know the date of the general election. Certainly if we are fortunate enough to do so I have no doubt that we will see our business progress in a good and useful way, which will ensure that as legislators we are seen to do our best on behalf of the people whom we represent.

Bill Wiggin (Conservative, Leominster)

Let me echo the Minister's kind words to you, Mr. Griffiths. I, too, am grateful to you for your excellent chairmanship, and to the Doorkeepers, the police, the Clerks and everyone who has worked so hard to ensure that the Bill is successful.

The Minister made a valuable point when he said that much of the work that had been to improve the Bill was done at the pre-legislative stage. Obviously we all pay tribute to the Select Committee for their work. The most important thing about pre-legislative scrutiny is that the Government listen. That is probably the key lesson from this. The Government have been listening during today's Committee stage,

during the Bill's passage in the other place, and during the pre-legislative scrutiny. They put their mind to delivering the best possible Bill for the people of Wales. I am glad that we have all been able to contribute in some small way to improving that.

That leads me to thank the Minister for changing the prison sanctions in the Bill. He is right to say that it is always worrying for the Opposition when a Bill finishes more quickly than usual, but it has been important that we demonstrate not only that this is a Bill that the Assembly asked for, but that we want it to go through in the best possible form. We have all done our best today to ensure that that happens. I echo the Minister's thanks to you, Mr. Griffiths, and to everyone who has contributed.

Hywel Williams (Plaid Cymru, Caernarfon)

I thank you, Mr. Griffiths for chairing the Committee with your usual courtesy and expertise. I also pay tribute to the hon. Member for Leominster, who has shouldered most of the burden for the Opposition. He has been standing up and sitting down quite a lot today; I hope that his knees stand the pace.

I also thank the Minister, especially in relation to clause 54; I was glad to hear the news about that proposal, because there has been cause for concern, and to hear what he said today and on Second Reading. I am sure we are all glad that the Bill has gone through its Committee stage so quickly.

I noticed as I came into Committee Room 12 that Committee Rooms now have names. This Room is named after a distinguished Prime Minister and Member of the Upper House, and is known as the Grey Room, which is a misnomer as our debates on the Bill have been entertaining and colourful.

Roger Williams (Liberal Democrat, Brecon and Radnorshire)

I, too, echo the thanks already expressed for your chairmanship, Mr. Griffiths, and for the contributions of everyone who made the Committee stage so successful. The Welsh Affairs Committee is already carrying out pre-legislative scrutiny on the draft Transport (Wales) Bill, using an innovative method and working more closely the National Assembly for Wales, which augurs well for future work. I look forward to that Bill going through the House. It has a fair amount of support among the parties represented in this Committee, and it will raise interesting issues, which we look forward to discussing.

Bill, as amended, to be reported.

Committee rose at twelve minutes past Four o'clock.