Budget Responsibility and National Audit Bill [Lords]

Public Bill Committee, 3 March 2011.

Clause 9

Kerry McCarthy (Labour, Bristol East)

I beg to move amendment 17, in clause 9, page 3, line 32, leave out ‘(at any reasonable time)’.

William McCrea (DUP, South Antrim)

With this it will be convenient to discuss amendment 18, in clause 9, page 3, line 33, leave out ‘reasonably’.

Kerry McCarthy (Labour, Bristol East)

It is a pleasure and a surprise to see you here again today, Dr McCrea.

Clause 9 is about the relationship between the Office for Budget Responsibility and the Government, and what information the office can reasonably request to enable it to carry out its job. These are probing amendments designed to find out why the Government feel the need to spell out in legislation the fact that the office has a right of access to such information only at a “reasonable time” and to information that it may “reasonably require”.

In previous debates, we said that we hope that the relationship between the OBR, the Treasury and the Government will be based on mutual understanding, and that there will be a consensual arrangement with a memorandum of understanding spelling out how they are to work together. I therefore hope that the Government do not assume that the OBR would unreasonably expect access to information, or ask for information that it did not reasonably require for the purpose of performing its duty.

The fact that the Bill includes the phrases “at any reasonable time” and “it may reasonably require” suggests that the Government may want to be able to resist requests for information. That obviously raises the suspicion that the OBR may have a struggle to get hold of Government information. Will the Minister explain what should come within the parameters of information that was reasonably requested, and what she believes it would be unreasonable for the office to ask for?

The underlying ethos that the Office for Budget Responsibility is independent and free from Government interference should mean that it is free to make its own judgment as to what is reasonably needed for it to carry out its job. We will be in dangerous territory if the Government try to interpret for the OBR whether it needs information.

Justine Greening (Conservative, Putney)

Good morning, Dr McCrea; it is lovely to see you resuming your chairmanship of the Committee.

I very much agree with the hon. Lady that the OBR should have timely and comprehensive access to the information required to produce its forecasts and analyses. I assure her that the use of “reasonable” in this context is a legal clarification to ensure proportionality. The provision is based on the power of the Comptroller and Auditor General to demand information from public bodies; it does not diminish the OBR’s ability to access information any more than it diminishes the Comptroller and Auditor General’s ability to do so. The provision is consistent with other legislation, including the National Audit Act 1983, which sets out the reasonableness test for the Comptroller and Auditor General.

The hon. Lady asked for some examples. If the OBR made a request at midnight or at 2 o’clock in the morning, and insisted on having the information instantly, that would probably not be reasonable. We want to ensure some sort of proportionality. Behind that legal concept lies the ability for interested parties to define the term widely in their working practices, but in extremis a dispute over interpretation would ultimately need legal resolution, based on precedents elsewhere.

We have tried to add some common sense, in that the provision is rooted in existing law and the existing understanding of what “reasonable” means. We wanted to use the same approach as previous Governments on information rights to other bodies, such as the Comptroller and Auditor General, which also operate in an arena where access is needed to a wide range of data. That needs to be set out in law. I assure the hon. Lady that there is no attempt to fetter the OBR’s access to information. We want to ensure that a common-sense approach is taken.

Kerry McCarthy (Labour, Bristol East)

As the Minister says, this sort of relationship is found between other bodies. Have there been legal challenges relating to disputes over whether information has been unreasonably or reasonably withheld?

Justine Greening (Conservative, Putney)

I am not aware of such cases in relation to the Comptroller and Auditor General’s role, which suggests that the provisions of clause 9 are right. They will operate broadly in the same way as the provisions that cover the Comptroller and Auditor General’s role.

My officials have passed me a note saying that they are not aware of any particular issues on the use of reasonableness. I hope that the provisions in the clause will work as effectively for the OBR as the same approach has in the past for the Comptroller and Auditor General.

Kerry McCarthy (Labour, Bristol East)

I thank the Minister for her response. Although we still have some concerns about how the provision will work in practice as the OBR is an entirely new operation, I beg to ask leave to withdraw the amendment.

Schedule 1

Chris Leslie (Labour, Nottingham East)

I beg to move amendment 19, in schedule 1, page 11, line 13, at end insert

‘, with the approval of the House of Commons Treasury Select Committee.’.

William McCrea (DUP, South Antrim)

With this it will be convenient to discuss amendment 23, in schedule 1, page 12, line 16, at end insert

‘and approved by the House of Commons Treasury Select Committee.’.

Chris Leslie (Labour, Nottingham East)

Yet again, may I say how happy we are to be under your benign leadership this morning, Dr McCrea?

The amendments are fairly straightforward. We seek to understand the Treasury’s logic in respect of the appointment of the non-executive members of the Office for Budget Responsibility. I have some questions for the Minister that I hope will give us a better understanding of why the Bill is framed as it is.

Paragraph (1) of schedule 1 sets out arrangements for appointing the members of the OBR. The chair is appointed with the consent of the Treasury Committee, as are two of its members; but two other members—as I read it, they are non-executive members—are appointed without the consent of the Treasury Committee. It seems slightly strange that some members of the OBR should be appointed under different rules. It would surely be more sensible for the Treasury Committee to have oversight of all appointments to the OBR, as all its members will have relevance to its work. To exclude the Treasury Committee from giving consent to the appointment of two members seems unusual, as it could give rise to the notion that the other two members were special; or, indeed, even that they were supplied by the Chancellor of the Exchequer.

The schedule provides for the direct appointment of all members by the Chancellor, but removing the Treasury Committee’s role for some may mean that it could be easier to make the allegation that there is a more direct connection to the Treasury for some members than for others. That would be unfortunate. If the purpose of the legislation is to demonstrate beyond doubt—beyond even the perception of doubt—that the Treasury was pulling the strings, it would be better to insert that parliamentary safeguard in respect of all the appointments. Could the Minister set out her logic on that?

In an earlier debate, we discovered that at least two non-executive members were due to be appointed in the summer. I believe that we concluded in that debate that it would be early summer rather than late summer. Therefore, there is time for the Treasury Committee to have a role in the appointments. It is not that we are legislating out of any urgency.

Perhaps the Minister could explain the two-tier arrangement, if she has an opportunity, and explain for the benefit of the Committee exactly what she envisages as the role of the non-executives on the OBR. I am not sure whether they will be remunerated or have allowances, but they will have a role, and it would be useful to get a flavour of what exactly they will do. I would be grateful for a response from the Minister.

Justine Greening (Conservative, Putney)

The amendments would require that the appointment of the OBR’s non-executive members be subject to the same veto by the Treasury Committee as the expert Budget Responsibility Committee appointments. The Select Committee’s veto over the BRC appointments is exceptional. It is in place because it is appropriate to ensure the independence of those appointments in view of their executive responsibilities for producing the forecast. Non-executive members also have an important role in safeguarding the independence of the OBR, but it is actually the executive BRC that has responsibility for performing the core functions of the OBR. It is neither appropriate nor necessary for the non-executive member appointments to be subject to the same exceptional process involving a Treasury Committee veto.

The hon. Member for Nottingham East suggested that somehow the Treasury Committee had been excluded from involvement in the process. In fact, when it carried out its inquiry and reported on how the OBR should work, it explicitly asked for a role in vetoing any member of the BRC, but it did not ask for a role in respect of the non-executive directors. We aligned the Bill with that, and there are also the other reasons that I have just given. Additionally, the independence of the non-executive positions is already provided for through the appointment process.

Sheila Gilmore (Labour, Edinburgh East)

Would the Minister consider whether there would be protection for the Government themselves in having those appointments approved by the Treasury Committee, just to remove any suggestion that the people who are put in place are not truly independent?

Justine Greening (Conservative, Putney)

I take on board the hon. Lady’s point, but I go back to my previous comment. The Treasury Committee itself clearly did not feel that it wanted to be involved in that matter. Obviously, hon. Members would have to approach the Chair of the Select Committee to find out what discussions took place about whether the Committee should be involved in the process. It may be that it felt that extending its remit—I know we shall debate future amendments about the Treasury Committee’s involvement with payments, for example—was becoming incredibly prescriptive, and that it would prefer the flexibility to spend its time carrying out inquiries, as it ordinarily does. Of course, the Select Committee would always have the flexibility to carry out inquiries into whether it believed the independence of the OBR was working effectively.

Chris Leslie (Labour, Nottingham East)

Will the Minister give way?

Justine Greening (Conservative, Putney)

Perhaps I could make just a few more points which I hope will provide some reassurance. The practice of delegating responsibility for identifying candidates is common to many bodies. The Committee will be aware that the Treasury Committee does not have a role in appointing the Monetary Policy Committee and the Governor of the Bank of England, so its role in relation to the Budget Responsibility Committee is, as I said, absolutely exceptional.

Chris Leslie (Labour, Nottingham East)

The Treasury Committee might not have asked about the non-executive members at the time, perhaps because of an oversight, but may now express an interest in doing so; it seems natural that it might. Will the Minister look favourably on an amendment being tabled, perhaps before Report? It seems a simple concession to make; if the Treasury Committee made such a request, would she be happy to accede to it?

Justine Greening (Conservative, Putney)

I am not sure that we would be able to accept amendments that were so fundamental at this stage. The hon. Gentleman says that it is possible that the Treasury Committee may have had an oversight when carrying out its exhaustive and helpful inquiry into the workings of the Office for Budget Responsibility, when it took evidence from a range of people who were knowledgeable about how the OBR might work. We should have confidence in the process rather than second-guessing the outcome of the inquiry.

I hope that I have answered all the questions raised by the Opposition.

Chris Leslie (Labour, Nottingham East)

I know that it is early in the morning, but I was hoping for a slightly more consensual approach from the Minister. Given that the word “Resist” always appears in big black letters at the top of Ministers’ speaking notes, she has certainly done her job diligently. However, her argument relied on two principal pillars.

The Minister argued that for the Treasury Committee to have oversight over executive appointments was exceptional, and that having such oversight over the other two, non-executive, members would be beyond the pale; it was not possible, because the Government were making an exceptional concession by allowing—how generous—Parliament the ability consent over the three executive appointments. I am not sure that the argument that an exception in those three cases prevents there being an exception in five cases is necessarily a strong one. It is almost as though the Minister is saying, “We’ve been very generous so far, but that’s it. No more.” That is almost treating Parliament in a childlike way. Surely there can be no harm to the Treasury, and certainly not to Parliament, in ensuring that the oversight and consent extends to all members of the OBR, particularly given the possible perception that the two non-executives are the Chancellor’s narks, keeping a beady eye on what goes on and undermining the independence of the office.

It would be far easier for the Minister to concede that simple point and remove all doubt about whether the non-executive members—on behalf of the Chancellor—were sitting on the shoulder of the chair of the OBR and keeping a beady eye on what he does. I do not want that accusation to be made, but it could be made by people who may disagree with what the OBR does or who feel that it is being steered implicitly by Treasury orthodoxy. The argument about exceptional circumstances does not hold.

Justine Greening (Conservative, Putney)

I understand that the hon. Gentleman wants to continue speaking to the amendment, but he is labouring the point. His minor irritation might be better directed to the Treasury Committee, which he clearly believes did not do a good enough job in its original inquiry because it somehow managed to miss the fact that it should have a veto over the non-exec appointments. Does he believe that the Treasury Committee is doing an adequate job, or does he suggest that it was not performing well when it failed to spot a role that it should have had? Perhaps it would be better if he directed his comments to the Chair of the Select Committee. However, when the Select Committee put out its press release on the OBR, it said:

“These would give the OBR a good prospect of entrenching its independence.”

It was talking about the terms of reference, which cover all aspects, including the non-exec appointments.

Chris Leslie (Labour, Nottingham East)

I understand that the Minister is moving from the exceptional argument to one about the Treasury Committee. She says that it welcomed the consent over the three executives, but what the Treasury Committee did not do was say, “We don’t want consent over the non-executives.” Earlier, as the record will show, I asked her what would happen if the Treasury Committee said, between now and Report, that on reflection it wanted oversight over the two non-execs. She said that it would not be appropriate or helpful to make amendments to the Bill. Even if the Treasury Committee says that it wants oversight over the two non-execs, she has ruled that out as well. She makes the point that the Treasury Committee did not want oversight, but that even if it did she would not give it. The point about the exceptional argument does not hold water either.

Graham Jones (Labour, Hyndburn)

It is a pleasure to serve under your stewardship, Dr McCrea.

Does it not undervalue two people on the OBR Committee if they are there on different terms? The relationship between the five members of the OBR may prove difficult because they are not on the Committee under the same terms of reference. If there are conflicts, they would come out through the proposed mechanism, which can only add to the issue.

Chris Leslie (Labour, Nottingham East)

Absolutely. There are occasions in Committee when we have political differences over fundamental points of principle, but there are other occasions when small, simple concessions are suggested by the Opposition in the course of scrutinising and improving the Bill to try to ensure that the legislation is stronger after going through the parliamentary process than it was before.

There are times when Departments want a clean-skin Bill to slip through Parliament in all conditions unaffected and untrammelled. I hope that, on reflection, the Minister will recognise that it is far easier to ensure that the Treasury Committee has that oversight, to put beyond doubt the suggestion that two of the three members of the OBR are directly appointed by the Chancellor. [Interruption.]

The Minister was on the verge of intervening, but she has changed her mind. Perhaps that is sensible for the time being, because she is being more thoughtful about the proposal and I am sure that most of the Committee will welcome that. It should be something on which she reflects. It will be useful to consider the issue again on Report when we would be happy to support a Government amendment. I will have a conversation with the Chair of the Treasury Committee about this point to find out his views.

Justine Greening (Conservative, Putney)

Is the hon. Gentleman saying that although he has made a proposal in relation to the Treasury Committee, he has not yet asked the Committee whether it wants it?

Chris Leslie (Labour, Nottingham East)

I assumed that the Government had other reasons for excluding the Treasury Committee.

Justine Greening (Conservative, Putney)

Is that a yes or no?

Chris Leslie (Labour, Nottingham East)

If the Minister said in her argument that the Committee did not particularly request that oversight, I now have the duty to find out what happened. Perhaps it did not consider the issue at that point in time. She asks me whether I have consulted the Treasury Committee, but she knows that there are no formal means for me, as an Opposition spokesperson, to consult the Committee. We have a parliamentary process; it has a Committee stage and a Report stage. Her reason for resisting the amendment seems to rest entirely on the fact that I, as the person who is making the amendment, have not gone through the process of formally consulting the Treasury Committee. In the rule book of ministerial arguments, that really is on the very back page, in one of the annexes.

Justine Greening (Conservative, Putney)

I do not agree at all with the hon. Gentleman. The Treasury Committee has been part of the consultation on setting up the OBR. As part of its inquiry, it took evidence from a range of people who have been involved. We have taken many of the Committee’s proposals and suggestions about how the OBR could be improved and built them into the Bill.

The hon. Gentleman has tabled an amendment about the Treasury Committee’s role that does not reflect anything that it asked for when it went through the exhaustive process of conducting an inquiry into how the OBR should work. It now turns out that he has not even found the time to consult or have a brief conversation with the Chair of the Select Committee, yet he is telling me that I should be more open-minded.

The Government have done absolutely the right thing. We have responded to a formal piece of work that the Treasury Committee bothered to do, but the hon. Gentleman is completely ignoring it.

Chris Leslie (Labour, Nottingham East)

I am so sorry that the Minister is taking this stick-in-the-mud view of our reasonable suggestion. I am asking her to address the dangerous perception that could arise that two of the members of the OBR are the Chancellor of the Exchequer’s place people. The fact that she protests so much for retaining his right directly to appoint those members is starting to make me think that there might be something in that perception. I hope that is not the case, and that the non-executive members of the OBR are not the Chancellor’s narks, but if she is absolutely of the view that it would be impossible for Parliament to have a role in approving them, people will be suspicious.

Justine Greening (Conservative, Putney)

Will the hon. Gentleman give way?

Chris Leslie (Labour, Nottingham East)

If the Minister will address that point, yes.

Justine Greening (Conservative, Putney)

I will. I am sure that if the hon. Gentleman actually bothered to read the Bill, he would realise that the non-exec members will be nominated by the OBR. If he is saying that it will not be independent enough to carry out that role, I would be interested to hear that, but the nomination process will be absolutely transparent and open. He is pushing his argument beyond what is sustainable, but I await his further comments.

Chris Leslie (Labour, Nottingham East)

The Bill makes it clear that the Chancellor of the Exchequer will make the appointment. They will be his appointees; that is the process. As it is felt appropriate to give the Treasury Committee a double appointment role—in essence, a concurrent ability—in respect of the executive members, it does not seem to me that our amendment is unreasonable. Why not the two non-executives? Yet the full force of ministerial edict has landed firmly on this Committee to resist it in all circumstances.

Robert Goodwill (Conservative, Scarborough and Whitby)

Hear, hear.

Chris Leslie (Labour, Nottingham East)

That makes me doubly suspicious that something is up. I am not naturally a suspicious person. I am sure that the people who may be applying over the next few months for the two non-executive roles and who will be appointed will be decent and honourable, but the suspicion will linger in the air. It would have been so simple, and would have involved no cost at all to the Minister, simply to extend the approvals. I cannot understand why she would resist that.

David Nuttall (Conservative, Bury North)

I have been listening carefully to all the hon. Gentleman’s points, but it seems to me that if the issue is so vital to him it would have surely been picked up by the Treasury Committee. Looking at the matter totally objectively, I am prepared to accept that the fact that it did not do so is conclusive evidence that it was not concerned about the issue. Therefore, we should rest assured that the Treasury Committee is satisfied on this point.

Chris Leslie (Labour, Nottingham East)

As hon. Members know, absence of evidence is not evidence of absence. We do not know for sure that the Treasury Committee has conclusively said, “We don’t want a role in the appointment of non-executive members.” We have to find that out before we get to Report. This is a genuine, non-partisan point. After all, we are not secretly trying to give Opposition Members a role in the appointment process—there is a Government majority on the Treasury Committee—or trying to confect something. The principle has already been established, because there is already oversight and consent for the three executive members. Why, therefore, can the Minister not have an open mind on Report?

If the Treasury Committee says that it does not want that oversight, that it is too onerous and that three is sufficient in terms of time for pre-appointment hearings or whatever, I am quite happy to concede and say that that is the balance that should be struck. We should, however, have the opportunity to allow Parliament to extend its view over this important office, particularly given that it would be such a cheap and easy thing to do; it would have absolutely no cost and would go beyond reasonable doubt to disprove that the appointments were somehow ministerial. That is the only point that I am making. I think it is reasonable. The Minister does not. We should test the view of the Committee.

Kerry McCarthy (Labour, Bristol East)

I beg to move amendment 20, page 11, line 18 [Schedule 1], at end add—

Amendment 20 was suggested by the Institute of Chartered Accountants in England and Wales in a helpful brief that it circulated before the Committee stage. It is fairly obvious where the institute is coming from, and it is something that, with its members’ long experience of working as chartered accountants and coming up against the views of economists, shows slight scepticism about how rooted in the real world economists are when compared with members of the institute. The suggestion is that at least one person appointed to the OBR, either under paragraph 1(1)(a) or paragraph 1(1)(b) of schedule 1, should not be an economist and should actually have experience in public finances, accountancy and fiscal sustainability issues. At this point, I wish that I could remember the joke of my hon. Friend the Member for Dunfermline and West Fife about how many economists it takes to change a light bulb, which would have illustrated my point quite well, but I cannot remember the punch line, so it is probably best not to go there. The OBR should not be full of academic economists who take an intellectual view of things; it should have at least one voice on it that has real experience of working in public finances.

David Nuttall (Conservative, Bury North)

How would the hon. Lady define exactly who is an economist?

Kerry McCarthy (Labour, Bristol East)

The hon. Gentleman makes a good point, and that was something that we wrestled with when we drafted the amendment. Obviously, it could be somebody who has experience in public finances, but who has a degree or masters in economics. Does that make them an economist? This is a probing amendment, but it presses the point that, given the OBR’s remit, particularly its task of passing judgment on the sustainability of public finances, perhaps—at the risk of offending the economists or self-defined economists in the room—a voice from the “real world” should have a say in those matters. I am interested to hear what the Minister thinks.

Justine Greening (Conservative, Putney)

It would be very hard to define an economist in law, although that would certainly create an interesting debate. I speak as one of those indefinable people, having done an economics degree and then become a chartered accountant, so I do not know where I would fit into the paragraph. The amendment refers to someone who would

“not be an economist, but have experience”,

but I sure that someone can be an economist and have experience in public finances.

The hon. Lady is correct that there should be a broad range of experience on the Budget Responsibility Committee. I understand that, but we should not fetter its discretion over whom it ultimately appoints. No doubt, its officials will read transcripts covering the issues raised by hon. Members and peers, but we should allow the BRC and the chair to take their own decisions about what mix of skills they need. I also refer the hon. Lady to the points made by her and her hon. Friends earlier in the week about how the role of the OBR might develop—for example, by its considering specific issues such as child poverty or local government finance. The danger of prescribing a skill set is that that would make it harder for the OBR to have flexibility.

Duncan Hames (Liberal Democrat, Chippenham)

I thank the Minister for giving way, and I thank you, Dr McCrea, for your patience while I briefly intervene.

As a Member of Parliament, an economist and a chartered accountant, I am conscious that most of my accountancy experience is not in the technical area of tax accountancy. I wonder whether an amendment that would require the appointment of an accountant per se, despite the broad range of my Chartered Institute of Management Accountants qualification, actually meets the objectives sought by the Institute of Chartered Accountants.

Justine Greening (Conservative, Putney)

The hon. Gentleman makes the broad point that it is hard to define not only an economist, but an accountant or the holder of his set of skills.

Stephen Williams (Liberal Democrat, Bristol West)

I thought that we might as well flaunt our qualifications. As someone with a degree in economic history and as a member of the Chartered Institute of Taxation, I endorse what my hon. Friend the Member for Chippenham said. It is apposite that we are discussing this matter on the day that the National Audit Office has published a report which again, as when it was last raised five years ago, shows that some Departments still do not have enough fully qualified accountants looking after the public finances. If the Minister is sympathetic to the amendment moved by the hon. Member for Bristol East, that will send a good signal to the rest of the civil service.

Justine Greening (Conservative, Putney)

I hope that I have made sympathetic comments about the amendment. I agree that the Government need to look at whether we have the right financial skill set across the civil service to ensure that not only in Departments are there strong finance functions to control spending, but in policy making in the civil service generally there is a good sense of financial management and the ability to manage resources flowing from proposed policies and decisions—but I digress.

I fully accept what the hon. Member for Bristol East has said about the amendment, but it is not right to fetter the ability of the BRC to achieve the right mix of skills, as it sees fit, because that would compromise its independence. No doubt, the ability to scrutinise exercised by those such as the Treasury Committee—and, in its case, the ability to veto appointments—means that there will be safeguards to ensure that the prospective skill set will enable the BRC to fulfil its statutory duty.

Kerry McCarthy (Labour, Bristol East)

We may have just heard several job applications or markers being put down, perhaps not for this round of appointments but when it comes to reappointments. It is quite rare these days for me and my neighbour the hon. Member for Bristol West to agree on things, so I am glad that he shows some support for me on this point.

Stephen Williams (Liberal Democrat, Bristol West)

AV?

Kerry McCarthy (Labour, Bristol East)

The hon. Gentleman suggests that we are in agreement on AV, although in a rather unenthusiastic way on my part and a slightly more enthusiastic way on his.

William McCrea (DUP, South Antrim)

Not on this Bill.

Kerry McCarthy (Labour, Bristol East)

Exactly. We digress. I accept the points the Minister made. It is obviously quite difficult to prescribe this in law. The amendment was tabled to put it on record that we think there should be a broad skills set. We hope that when the appointments are considered that is taken into account. I beg to ask leave to withdraw the amendment.

Kerry McCarthy (Labour, Bristol East)

I beg to move amendment 21, page 11, line 20, leave out ‘5’ and insert ‘3’.

William McCrea (DUP, South Antrim)

With this it will be convenient to discuss amendment 22, page 11, line 23, leave out ‘5’ and insert ‘3’.

Kerry McCarthy (Labour, Bristol East)

The amendment deals with the period of appointments. The Bill states that appointments should be for five years and in the case of the two members appointed under paragraph 1(1)(c), for no more than five years. We suggest that five years is slightly on the long side and that a period of three years should be considered. The Minister will be aware that the external members of the Monetary Policy Committee are appointed for a period of only three years. Where did the period of five years came from?

We will come later to amendments that talk about the review period. The other place debated whether the review period should be five or three years and we tabled amendments to suggest that it should be three. Obviously the period of appointments would reflect that to an extent. The OBR is in its infancy and its role will naturally evolve over time. The nature of its work and what will be required of a member is a moveable feast at the moment. If people are appointed to the committee now who turn out not to meet the skills set that is required, having them there for five years will not give us much flexibility to change the committee’s composition and appoint people who really can meet its remit.

Justine Greening (Conservative, Putney)

The first thing to say is that the initial appointments are staggered. For example, Robert Chote has been appointed as chair for a five-year term. Graham Parker has been appointed as a Budget Responsibility Committee member for a four-year term and Steven Nickell for a three-year term. One of the reasons why we have done that is to avoid having a full slate of new appointees all at the same time. Indeed, we expect that the initial non-executives will also be appointed for staggered terms of three and four years so that their appointments do not expire simultaneously either.

I take on board the hon. Lady’s point that we could have had a shorter term. Ultimately we can have the debate about how long a term we need for the BRC and the non-executives, but our sense was that five years as a fixed-term limit was the right term to make sure that the committee could build, use and then retain its expertise before reappointments were necessary. Members are allowed to be reappointed only once. Reducing the term to three years might result in six years, which might not be as long as we would want to maintain the committee’s expertise. Five years will allow them to build deep expertise on the necessary issues.

On the non-execs, the five-year term is, obviously, a maximum. There is nothing to prevent a shorter term. Again, we felt that if the Budget Responsibility Committee believed that five years was right to meet the need to build up deep expertise, we did not want to limit that unnecessarily by setting too low a cap. That is why we chose five years. In terms of independence, the shorter the time period, the more risk of undermining independence as the question of reappointment comes up. We have tried to strike a balance. I think that five years is the right amount, but as I said, non-execs’ terms can be shorter in practice.

Kerry McCarthy (Labour, Bristol East)

I thank the Minister for that explanation. It is useful to put on record the terms of appointment that are envisaged, particularly for non-execs. It goes to the heart of the point that I was making in the first instance that a fixed appointment of five years might be excessive. She has said that members might serve for three or four years and that one of the executive directors will be in place for only three years.

On the Minister’s point about concern over reappointment, and the possible impact, one would hope that the sort of people appointed to the Office for Budget Responsibility would not be so concerned about their prospects of reappointment, and that the checks and balances built in about how appointments are made would not affect them. However, I appreciate that when appointments to public bodies are made, there is always a balance to be struck between doing a robust and vigorous job of holding the Government to account and being aware that the Government have some say in whether someone will be allowed to continue doing so. The Minister made the valid point that a longer term will give people more freedom and independence to speak their mind, so I beg to ask leave to withdraw the amendment.

Chris Leslie (Labour, Nottingham East)

I beg to move amendment 24, page 12, line 23 [Schedule 1], at end insert—

William McCrea (DUP, South Antrim)

With this it will be convenient to discuss the following: amendment 25, page 12, line 29 [Schedule 1], leave out from ‘a’ to end of line 30 and insert

‘compensation payment to the person in accordance with sub-paragraph (3).

Amendment 26, page 12, line 30 [Schedule 1], at end insert—

Chris Leslie (Labour, Nottingham East)

Paragraph 4(1) details the remuneration arrangements for members of the Office for Budget Responsibility. We feel that the drafting is slightly weaker at a couple of points than it could be. Amendment 24 would ensure that the Treasury reviews the remuneration of members of the OBR annually and publishes that review.

We think that it is important generally, in this day and age, for increasing care to be taken about remuneration in quangos and public bodies. All public bodies are under more scrutiny, but we think that the Office for Budget Responsibility in particular must take the lead among public bodies and across the public sector. We feel that even more transparent remuneration arrangements would be a good thing.

I understand that Robert Chote currently takes a salary equivalent to the Prime Minister’s £142,000. I think that he is working as a consultant, so the Treasury pays VAT on top of that and adds a 20% pension contribution. Those terms and conditions are quite generous; I am sure that many Members of Parliament who earn considerably less look up to those dizzy heights from the foothills and feel that it must be an exceptionally important and august appointment.

Will the Minister tell us on what basis the judgment was taken to pay the chair of the OBR that relatively generous level of salary? Will there be changes to that remuneration when the new financial year begins in April? I am not sure when the Bill will receive Royal Assent, but a new financial year will start in any case. Is there an expectation that the salary of the chair of the OBR will invariably be tied to that of the Prime Minister? Will there therefore be a pay freeze for the chair of the OBR? Will the 5% ministerial salary reduction that the Prime Minister has conceded roll across to the chair of the OBR as well? Can the Minister explain the logic for not enshrining an annual review process? I am not sure why it is not in the Bill, because it seems a sensible thing to put in legislation.

Amendments 25 and 26 relate to paragraph 4(2), which states:

“Where…a person ceases to be a member of the Office otherwise than at the end of the period for which the person was appointed”,

or, if

“it appears to the Office and the Treasury that there are circumstances which make it right for the person to receive compensation”—

presumably misconduct or malfeasance, but who knows?—

“the Office may make a payment to the person of such amount as the Treasury may determine.”

Those are broad terms; it is left entirely to the Treasury as to what the amount could be.

Government Members will recall that their good colleague, the Minister for the Cabinet Office—is he the Chancellor of the Duchy of Lancaster as well?—brought the Superannuation Bill before Parliament. The Superannuation Act 2010 adapts many of the provisions on civil service compensation, on severance arrangements and so forth, so that the untrammelled pay-offs, compensation and golden handshakes, which can escalate and have brought the public sector into disrepute historically, are reined in. The Act makes it clear, as the amendment sets out, that when there is compulsory severance for misconduct and so forth, it should never be for more than an amount equivalent to 12 months of salary. When there is voluntary severance, it should never be for an amount equivalent to more than 15 months of salary.

Amendment 26 cuts and pastes provisions from the Superannuation Act and would apply them to the OBR as well. That seems a reasonable read-across. As the OBR is supposed to be the standard bearer of budgetary responsibility, it would seem absolutely proper, and best practice, to enshrine the self-same limitations in its compensation and severance arrangements.

I hope these are helpful amendments, and I am more than happy to withdraw them if the Minister wants to adapt or vary them. We want a sense from the Treasury as to why such provisions were not included.

Justine Greening (Conservative, Putney)

Amendment 24 seeks to have an annual review by the Treasury of the amount that members of the OBR are paid. It is not desirable for the Treasury to review the OBR remuneration on an annual basis, for a number of reasons. First, it will create uncertainty for OBR members, and it could undermine their independence if at the beginning of every year, their salaries were to be re-reviewed. Secondly, it is unnecessary, because the terms of contract for OBR members are fixed for five years, and that includes their pay. That information is already made public and those contracts and terms, and letters of appointment, are already publicly available on the Treasury website, which I am sure the hon. Gentleman can find.

Chris Leslie (Labour, Nottingham East)

I am grateful for the Minister’s clarification. If somebody’s salary is fixed in a contract for five years, is there a provision for increasing it over that time?

Justine Greening (Conservative, Putney)

I was about to come to that point. Under the terms of those five-year contracts, for the first two years, as with other public sector pay, salaries will be frozen; thereafter, they will rise in line with the consumer prices index. The way the salary works across the course of that appointment is already set out and publicly available, so there is no need for the Treasury to return to it every year. Doing so would undermine the Budget Responsibility Committee members.

Alison McGovern (Labour, Wirral South)

It would be helpful to have a further point of clarification on the record. Paragraph 4(1) refers to “pension, allowances or gratuities”. As Members of Parliament, we are only too aware of the difference between allowances and expenses. Will the Minister put on record how the contract terms will interpret such allowances? Will they be funds allocated for costs expected, or cost reimbursement of expenses incurred?

Justine Greening (Conservative, Putney)

As the hon. Lady knows from our debate earlier this week, the OBR has a budget, from which it runs its activities, as does any non-departmental public body. Its individual members have contracts of employment, which clearly specify pay and how it will change over the term of the contract. Interestingly, it specifies that there will be no bonus for those members.

It has been pointed out that the roles are pensionable, as we might expect. Other than that, however, the expenses of running the office will be part and parcel of the usual spending review allocation that has been given to it to run its duties.

Alison McGovern (Labour, Wirral South)

Is the expectation that allowances will be allocated to OBR members on the basis of actual costs incurred, as are our expenses, rather than as a general allowance? Some organisations, for example, have a housing allowance, which would not apply to OBR members, of course. There might, however, be subsistence allowances rather than subsistence expenses. I would be grateful for the Minister’s clarification on that point.

Justine Greening (Conservative, Putney)

The allowances will be comparable to those for senior civil servants. The hon. Lady can look at the list of senior civil servant allowances; those will broadly be in place for OBR members. I should point out that members are not civil servants, but the allowances will be comparable.

Chris Leslie (Labour, Nottingham East)

We know about the remuneration of the chair of the OBR, but what is the remuneration for the other two executives? What will be the remuneration allowance arrangements for the non-executives?

Justine Greening (Conservative, Putney)

The hon. Gentleman keeps talking about remuneration allowances; it might be better to ask, “What is the pay?” The pay for the two other Budget Responsibility Committee members will be £69,000. The pay of the chair of the committee is already in the public domain. There is potential for the roles of the non-executive directors to be remunerated. Clearly, however, we are about to begin the process of appointing those people, so at this point I cannot tell him what, if any, remuneration they will get.

I move on to amendments 25 and 26. The Bill gives the OBR and the Treasury the discretion to award a compensation payment if the appointment of a member comes to an end before the period for which the person was appointed. That discretion is standard for legislation establishing NDPBs, which this does. I should emphasise that the discretion is intended to be used only in exceptional circumstances. The Treasury determines the amount, because it would be inappropriate for the OBR itself to determine such payments. In addition, any compensation payment would have to comply with the relevant Cabinet Office and Treasury guidance and represent value for money.

Although the spirit of the amendment may be to avoid excessive payments by linking the terms to those that previously applied to the civil service compensation scheme, to do so in this case would be inappropriate because the OBR’s members are not civil servants.

Sheila Gilmore (Labour, Edinburgh East)

Nevertheless, is it not important to give a signal? The appointees are clearly not civil servants, but the Minister has indicated that in other respects the terms and conditions on allowances and expenses will be similar. Having made such a big issue of public service pay, severance pay and compensation, it is important to be consistent, and for the OBR to take a clear lead and say that it will be bound by the same restrictions or rules that the Government have clearly stated they wish for the civil service more generally.

Justine Greening (Conservative, Putney)

That is precisely why there is a standard provision for such an NDPB. That is the reassurance I was trying to give the hon. Member for Wirral South. The provision in the Bill is exactly what we would have for any NDPB, but my other point was that behind that is the need for any payment. As I said, we expect payments to be made only in exceptional circumstances, and they would have to comply with Cabinet Office guidelines and represent value for money for the Treasury. It is a standard provision for setting up such a NDPB, and behind it is the need, which the hon. Member for Edinburgh East is right to point out, to make the usual governmental checks to ensure that any payments are reasonable and not excessive.

Chris Leslie (Labour, Nottingham East)

Just because it is existing practice for other NDPBs does not mean that this not a good opportunity to improve the circumstances, as perhaps the Minister felt was necessary just before Christmas during the passage of the Superannuation Act 2010. Can she foresee any circumstances when the severance or compensation arrangements would exceed those that might apply to the civil service terms—12 months for compulsory severance and 15 months for voluntary severance? If she will at least put on record that she cannot see any circumstances in which those terms would be exceeded by the Treasury, it will assure the Committee that it is not necessary to write this into the Bill.

Justine Greening (Conservative, Putney)

The NDPB we are establishing has the same provisions that any new NDPB would have. To the extent that compliance with Cabinet Office guidelines and the Treasury assessment of value for money would have to be behind any discretionary payment within the OBR, and across any Department, no different benchmark will be applied. Hypothetically, there should not be, as the hon. Gentleman points out, a need for a payment in excess of what would be seen in a different NDPB with the same rules behind it. I can provide some reassurance, in that this part of the schedule will provide precisely that check to ensure that there is an assessment of any compensation payments.

My concern about amendment 26 is that it seems to suggest that payments will not be exceptional; they will somehow be routine because we will align the OBR with the routine way in which similar payments are made across the rest of the civil service. I do not think that amendment 26 would be sensible, because it seems to suggest some kind of routineness in the payments. We do not want to give that impression; we think that any such payment would be an extreme exception. I hope that I have answered some of the points that have been raised and I look forward to hearing the hon. Gentleman’s response.

Chris Leslie (Labour, Nottingham East)

On amendment 24, we know that the chair of the OBR will receive the Prime Minister’s terms and conditions, although not free housing and so forth, but broadly speaking in terms of pay. The other executives will receive £69,000, which from a Member of Parliament’s perspective, and that of many other public sector workers, looks quite generous too. However, there has clearly not yet been a decision within the Treasury on non-executive remuneration; I think the hon. Lady was saying that they have not yet decided what to pay non-executives. There is hope that they will be frugal, efficient and reasonable from a public point of view. I am surprised that the Treasury has not yet settled on what those sums are; but at any point inspiration might strike the Minister on what those could be.

I listened to what was said about the annualised publication of a review and I think it would be good practice, but given the hon. Lady’s comments on terms and conditions being set out for five years I understand why she would want to resist. It sounds fair enough, except that a two-year pay freeze is one thing, but absolutely guaranteeing a CPI uplift in salary thereafter is quite generous compared with the terms of many other people in the public service. I for one cannot envisage circumstances when, for example, Members of Parliament would be granted such arrangements.

We know that in the parliamentary context there was supposed to be a move towards MPs not voting on their own salaries, and it would be done independently; but that seems to have broken down in the translation. I digress slightly, but tying a salary uplift to CPI for a three-year period after the pay freeze is quite generous. Given that this is the Office for Budget Responsibility I am surprised that that is the case.

Amendment 24 is not something that I am particularly concerned about; we have had a debate on it. However, I am surprised that the Minister is resisting amendments 25 and 26. Opposition can be a depressing place from time to time. We come to Committee and try our best to make whatever points we can. We are all trying our best to improve legislation and we want to support the Bill as it goes forward, but to feel that our suggestions are constantly rebuffed in this rather cruel way can be quite dispiriting. Nevertheless we must keep persisting.

Duncan Hames (Liberal Democrat, Chippenham)

In an effort to encourage the hon. Gentleman, given his concerns about public expenditure by the body, perhaps having slept on it, he can take some comfort from the fact that we supported clause 7 the other day, contrary to his advice.

Chris Leslie (Labour, Nottingham East)

It was not contrary to my advice in one sense; I was not opposed to the idea of efficiency and effectiveness, I just felt that it needed defining. That is part of the problem with the Bill all along. A little bit of petticoat is shown to suggest that we want to be efficient, frugal and so forth, but when it comes to the crunch of ensuring that that is that case the Bill falls a bit short. For example, under schedule 1,

“the Office may make a payment to the person of such amount as the Treasury may determine.”

It is very untrammelled and not restrained. Of all public bodies the OBR should be the one setting the pace and showing that it is the most responsible. That is palpably not going to be the case. The Minister’s argument essentially rested on the fact that this will be no different than is the case for any other non-departmental public body. I am not convinced that that is good enough. It was helpful that she said that she did not think that a pay-off in terms would exceed those that might occur in any other quango, but are hon. Members really convinced that the pay-off arrangements in other quangos are adequate from their constituents’ point of view? If the Government are content that quango pay-off and severance arrangements are perfect and adequate, that is an interesting state of affairs.

We have started down a road with the Superannuation Act where we ought to revisit these issues and ask, “What are the limits?” I hoped that the Minister would say that she could not envisage circumstances in which the arrangements for compulsory or voluntary severance would be more than 12 months or 15 months. That would be quite an easy thing for her to concede, but she did not say it. That is a pity, so I want to test the views of Committee members on amendments 25 and 26.

I beg to ask leave to withdraw the amendment.

Kerry McCarthy (Labour, Bristol East)

I beg to move amendment 27, page 12, line 33 [Schedule 1], at end insert—

‘with the consent of the House of Commons Treasury Select Committee.’.

We have already had quite a lively and robust debate about the role of the Treasury Committee in relation to the Bill and particularly appointments under the Bill. Sub-paragraph (1)(a) states that

“the consent of the Treasury Committee”

is required for the appointments to the OBR that are set out in sub-paragraphs (1)(a) and (1)(b). However, the drafting of the schedule is vague, which is why we have tabled the amendment. Paragraph 5 states:

“The Chancellor of the Exchequer may determine other terms of an appointment under paragraph 1.”

Paragraph 4 deals with remuneration. It is not clear, however, whether that relates to incidental terms and add-ons that the Chancellor of the Exchequer might prescribe when deciding the terms of appointment, or whether it is envisaged that he might consider something far more substantial under the proposals.

The amendment adds that the consent of the Treasury Committee is required. Obviously, if the Committee’s consent is required about who should fulfil the role, it would be appropriate for it to look at the terms of the appointment at the same time. No additional burden would be placed on the Committee, because the terms could be discussed in the round when considering the appointment.

Will the Minister explain why it was felt that the provision was necessary? If a contract is to be drawn up when people take up such appointments, that can be done in the usual way, and it does not need to be prescribed in the Bill. If the Minister explains what is meant by the proposals, we will be able to deduce whether the Treasury Committee should have a role.

Julian Smith (Conservative, Skipton and Ripon)

Has the hon. Lady spoken to the Chair of the Treasury Committee about the amendment?

Kerry McCarthy (Labour, Bristol East)

No, I have not but as I said, the amendment ties in and it would not be an additional responsibility. If the Treasury Committee takes the role that is envisaged in paragraph 1(a), which is that it should give consent to the appointments of the chair and the two other members who will be appointed under sub-paragraph (b), it would be easy for the Committee to look at the terms of the appointments as part of that process.

Paragraph 4 deals with remuneration. Obviously, if the other terms of appointment are things such as annual leave, sick leave, sabbaticals and whether staff would get a free bus pass for their partner, they are not appropriate matters for the Treasury Committee to discuss, and there is no way that it would want to be involved. The fact that terms of appointment are outlined in the schedule, however, leads me to think that the issue might be far more substantial, in which case it might be appropriate for the Treasury Committee to look at it when it considers the appointments. I hope that the Minister will elaborate on those points.

Justine Greening (Conservative, Putney)

I assure the hon. Lady that the schedule is a standard provision for the establishment of such a body. It is necessary because in future, we may want to have terms that include, for example, restrictions on other appointments that members of the Budget Responsibility Committee may have; for example, dealing with any conflicts of interest that may arise. The provision gives the flexibility to be able to deal with what may happen in relation to the Budget Responsibility Committee.

As the hon. Lady knows, those safeguards ensure that the terms are reasonable. First, they are transparent, and secondly, as she has pointed out, the Treasury Committee has a right of veto effectively over who the Budget Responsibility Committee members are. Clearly, the Treasury Committee can scrutinise the terms, too, although it would not be right to give it a veto on them; we would then, effectively, be extending its role into logistical, operational aspects of how the OBR will work. I repeat my earlier point: in the Treasury Committee’s exhaustive inquiry, it did not ask for that power either. However, as I pointed out, it is capable of scrutinising the terms of the OBR members, and such information is publicly available.

I hope that provides reassurance that a standard provision gives flexibility to the Office for Budget Responsibility and the Budget Responsibility Committee members. There is the opportunity for scrutiny by the Treasury Committee and, of course, by the public, because the terms are made publicly available on the Treasury’s website.

Kerry McCarthy (Labour, Bristol East)

I beg to ask leave to withdraw the amendment.

Kerry McCarthy (Labour, Bristol East)

I beg to move amendment 28, page 13, line 21 [Schedule 1], at end insert—

William McCrea (DUP, South Antrim)

With this it will be convenient to discuss amendment 29, page 13, line 28 [Schedule 1], at end insert—

Kerry McCarthy (Labour, Bristol East)

I suspect that we will only get as far as introducing this topic before the Committee adjourns. The amendment is crucial in that it goes to the heart of the relationship between the Office for Budget Responsibility and the Treasury. We have already flagged up concerns about the extent to which the OBR will be able to be genuinely impartial and free from political interference. I mentioned that in countries such as Canada and Sweden there came a point when political interference inevitably followed, although the intention was good.

I think the Minister has already said that the Office for Budget Responsibility will not be located in the Treasury, but we want confirmation that that will not be the case and have therefore tabled amendment 28 to confirm that the office and its employees will not be located in the same building as the Treasury. Although we can have Chinese walls and things that in theory separate and create independence, they would be slightly more difficult to enforce unless the OBR was physically removed from the Treasury.

Amendment 29 is also crucial. It would ensure that staff were employed solely by the OBR and not seconded to or from other departments, which is common practice in the civil service. People move from one department to another on secondments. In general, that is a quite a good thing for Treasury officials; it is useful for people who control the purse strings to occasionally have experience of working in some of the Departments that are trying to spend the money. Obviously, if there were a flow of staff from the Office for Budget Responsibility to the Treasury, or indeed from any other Department, that would compromise the OBR’s independence and impartiality and make things quite difficult. If someone is on secondment to the OBR but actually reports to the permanent secretary at the Treasury, it would be difficult for them to carry out their role in the independent and impartial way we expect of them.

An earlier amendment related to changing the terms of appointment and whether people would be able to hold other roles. That is relevant to amendment 29, which would provide that staff are employed solely by the office and addresses the question of whether they would be allowed to have outside consultancies or roles on boards, and whether that would create a conflict of interest for them in serving in the office. Our general thrust is that there should be a physical separation, the staff should be in a separate building and there should not be overlap with the Treasury and other Departments. It should be clear that the OBR is an arm’s length, independent body that is not subject to undue Treasury control.

Thomas Docherty (Labour, Dunfermline and West Fife)

I rise to support amendment 28. I suspect that it may prove a popular amendment with Members on both sides of the Committee. It would provide an opportunity—

William McCrea (DUP, South Antrim)

Order.

Roger Gale (Conservative, North Thanet)

I remind the Committee that with this we are discussing amendment 29, page 13, line 28 [Schedule 1], at end insert—

Thomas Docherty (Labour, Dunfermline and West Fife)

Good afternoon, Mr Gale. I believe I am right in saying that this is the first time I have had the privilege of serving under your chairmanship. I very much look forward to doing so this afternoon and perhaps next week.

I rise to speak in support of amendment 28, tabled by my hon. Friend the Member for Bristol East. I confess that I have an ulterior motive in supporting the amendment, and, based on some private conversations that I have had with Government Members, I suspect that they, too, might be tempted to see the reason of it.

The amendment would not just ensure that the Office for Budget Responsibility was based physically outside the Treasury but would allow it to be based elsewhere in the United Kingdom. I am sure that many hon. Members on both sides of the room will make articulate cases in their own right for the benefits of that. The hon. Member for Scarborough and Whitby would be a true champion of the merits of Scarborough, the hon. Member for Bury North would argue the case for basing the OBR in the north-west, and the hon. Member for Witham would make an equally powerful case for her constituency. Of course, it goes without saying that my hon. Friends the Members for Nottingham East and for Bristol East and other hon. Friends would make powerful cases, as would the hon. Member for Chippenham.

One reason a location has not been specified is that when I did a head count around the room this morning, I felt that Yorkshire would be in a powerful position, given the power of the Whips in this matter. Both of them would gang up on us humble Members and ensure that Yorkshire won the case. [Interruption.] I apologise—my hon. Friend the Member for Hyndburn is a Lancashire MP.

Julian Smith (Conservative, Skipton and Ripon)

Could I ask the hon. Gentleman to point out that, as a result of this Government’s investment in superfast broadband, rural Yorkshire would be a good place for his proposal, if the Government were to agree with it?

Thomas Docherty (Labour, Dunfermline and West Fife)

The hon. Gentleman is absolutely right about the merits of locating in a rural part of the UK. As a Member for a semi-rural constituency, I would echo that sentiment. However, I do not want to get tempted into a debate on the merits of individual locations. Suffice it to say that I think the amendment would produce an excellent clause. It is highly reasonable, and I am sure that the Minister, who has an excellent reputation as someone who keeps a tight hold on the Treasury’s purse strings, will see the strong case for it. We would not have to pay the exorbitant central London rates and office rents. A location in Bury, Witham, Livingston, Edinburgh or another place would save the Treasury a great deal of money. I very much hope that the Minister will be able to find some merit in the amendment.

Justine Greening (Conservative, Putney)

It is a pleasure to serve under your chairmanship again, Mr Gale.

I understand the rationale behind amendment 28, and, in many respects, I agree with it. We briefly touched on the OBR’s location yesterday, when I recounted the potential for a Treasury Minister to bump into Robert Chote, for example, in the Treasury. I said that I was sure that would not happen once the OBR had moved. Actually, it has already moved—that demonstrates just how independent it is—and is not located in the Treasury. In October, Robert Chote announced his intention to move the OBR out of the Treasury, and it moved in December. It now co-locates with the Attorney-General’s Office.

Future decisions on the location of the OBR will be a matter for the independent OBR and its chair. I have no doubt that Committee members who wish the OBR to be located in their constituencies will be able to make a passionate case to its chair on behalf of their local community. However, because the OBR is independent, such requests would have to be made to the OBR itself. It is important that the OBR is seen to be independent, and its location is relevant to that. At the heart of what we are trying to do is ensuring that it has an independent working relationship. That is the ultimate test.

The Congressional Budget Office was mentioned earlier, and I wondered where it was located—in particular, was it in a separate location? It is located in the Ford House office building, one of four buildings for House of Representatives staff on Capitol Hill in Washington DC. The Ford House office building is the only building not connected underground to the other office buildings or to the Capitol, and it is the only office building that does not contain offices for Members of Congress. There, as with the OBR, we see the use of ensuring that the office is located in a different place. However, the interesting thing about it being the only office building that is not connected underground is that it shows that being in a different building does not necessarily mean that you are not connected with other buildings. In relation to amendment 28, the OBR is already located separately.

Thomas Docherty (Labour, Dunfermline and West Fife)

Given that fact, and given that we are talking about less than 1 square mile of real estate, does it not therefore follow that the Minister can accept this reasonable amendment?

Justine Greening (Conservative, Putney)

I would be undermining the independence of the OBR if I told it where to locate. The hon. Gentleman should make his case to the chair of the OBR rather than to me as a Treasury Minister.

Thomas Docherty (Labour, Dunfermline and West Fife)

We do not want Parliament to tell the OBR where to locate. We simply want to tell it where not to locate.

Justine Greening (Conservative, Putney)

In a way, that is one and the same thing, so we do not need the amendment. In practice, it would not make any difference, because the OBR is no longer located in the Treasury.

I turn to the question of employees and secondees. Once the OBR is established by statute—that is the Bill’s intent—a number of forecasting experts will be formally transferred from the Treasury to the OBR. They will not be secondees; they will be direct employees of the OBR, and will report to the chair of the OBR. As we heard earlier, the chair will be independent. The process for appointing the chair is fully independent, and the appointment can be vetoed by the Treasury Committee. The OBR staff are absolutely independent.

Kerry McCarthy (Labour, Bristol East)

The Minister may be about to speak about this—I may be slightly premature—but she said that staff will be transferred from the Treasury. Who will decide which Treasury staff are to be transferred? Surely the director of the office should have the final say. Doing otherwise would suggest that the Treasury was trying to put its placemen or women in position.

Justine Greening (Conservative, Putney)

I agree with the hon. Lady. I assure her that the OBR is responsible for all future staffing decisions—not only hiring but firing.

In light of what I have said, we do not need amendment 29. The provision is clear cut; people working in the OBR will be working for the OBR. They will report to the chair of the OBR, and he has decision-making powers over his staff. Hopefully, I have now answered the shadow Minister’s queries.

Kerry McCarthy (Labour, Bristol East)

It is, of course, a pleasure to serve under your chairmanship, Mr Gale. I accept the Minister’s point that the office has already moved out of the Treasury. That is obviously welcome although I see no harm in having the Bill make that a permanent state of affairs. Who knows what may happen in future? As for the staff being employed solely by the office, I am reassured that Robert Chote will have complete discretion in the people he takes on. The Minister said that the forecasts would be transferred over and that sounded as if it was an automatic process based on people’s job descriptions. If people are currently doing the economic forecasting role in the Treasury, but Robert Chote does not think that they should join his team, is he entitled to say no?

Justine Greening (Conservative, Putney)

To be absolutely clear, the chair of the OBR is responsible for all hiring and firing of staff. As the hon. Lady will understand, there is a limited pool of talent to do the forecasting that the OBR needs to do. So, of course, as it starts it is perhaps understandable that it will draw from the talent that was in the Treasury. In future I would expect it to be able to draw more staff from other areas into its overall staffing levels. But it is absolutely in charge of hiring and firing.

Kerry McCarthy (Labour, Bristol East)

I thank the Minister for that reassuring response. There is one point that may still concern us. As she says, some people have already gone over from the Treasury to the office that is currently running. There is a potential conflict of interest if during the course of their career progression some of them return to the Treasury. Obviously within the civil service as a whole there will be far more career opportunities than there are in the OBR because it is a much smaller entity. We would not want to restrict people’s career development, but at the same time, if they spent a few years in the OBR and then returned to the Treasury, and if there was quite a lot of that cross-fertilisation going on, it would give cause for concern. That is something that needs to be kept under scrutiny once the office is put on a statutory footing and starts to bed down. I beg to ask leave to withdraw the amendment.

Kerry McCarthy (Labour, Bristol East)

I beg to move amendment 30, page 14, line 13, at end insert—

The amendment is fairly self-explanatory. Again, it addresses the point that we have discussed already about how the functions of the OBR should be as transparent as possible so that it can be as accountable as possible to the public and to Parliament. Obviously the Monetary Policy Committee publishes minutes of its meetings, albeit with some delay. We think the minutes of the Budget Responsibility Committee and any of the sub-committees that are established under the Bill should also be published. I should be interested to know whether the Minister agrees. If she does, perhaps she will be prepared to accept the amendment to ensure that that will definitely be the process in future.

Justine Greening (Conservative, Putney)

Because the OBR is independent, it is ultimately a matter for the OBR whether it chooses to publish the information relating to its committees and its contacts with Ministers. Schedule 1 allows the BRC to determine its own procedures and the OBR to determine the procedures of its committees and sub-committees. As I said, that supports independence. Minutes are probably not the best way to communicate the OBR’s conclusions. The hon. Lady may have in mind the Bank of England and the publication of the Monetary Policy Committee’s minutes. Those minutes are the principal means by which it explains its monthly policy decisions.

The OBR is not a policy-making committee, so it is appropriate for the Budget Responsibility Committee to explain its forecast judgment in its reports. That is one reason why, in the charter and the Bill, we make it clear that those reports should set out the risks considered by the OBR, the assumptions that it makes and the various methodologies that it uses, so that there is complete transparency.

It is not for the Government to say that the OBR should have to publish its minutes. There would be a danger of slight overkill if it had to publish the minutes of every meeting. However, it is important that when the OBR has finished its work, it is put into the public domain and that it is transparent and comprehensive. The provisions in the Bill ensure those very things. It makes it clear that all OBR reports must be published. As I said, those reports must include key risks and assumptions. The OBR has the underlying duty to act transparently. I assure the hon. Lady that there is a transparency safeguard. As for the questions that people might have about how the OBR goes about its reporting, I hope that that will be covered by the report.

Kerry McCarthy (Labour, Bristol East)

I thank the Minister for her response. In this and other sittings, she has stressed that the OBR is independent and should therefore decide for itself how to conduct its affairs and exercise its own judgment on whether to publish minutes. However, it is we in Parliament who are setting up the OBR. We are not just saying, “Here you are, get on with it.” The purpose of the Bill is to set out and prescribe in detail how the office should be run. This is our one opportunity to ensure that the office is given certain guidelines. I appreciate the Minister saying that the office will publish regular reports, outlining its reasons and giving the methodology on which it bases its forecasts. That is little different from publishing minutes of meetings.

Again, we come to the question of the relationship between the OBR and the Treasury. For example, it would be in the public interest to see minutes of any regular meetings the OBR had with Treasury officials. I do not suggest that a full transcript should be made of everything that it discusses, because some matters will obviously be confidential. It would also be a huge burden. I would be interested to know to what extent it would be covered by the Freedom of Information Act, but it is entirely reasonable to suggest that the OBR should publish minutes of those meetings.

Justine Greening (Conservative, Putney)

The hon. Lady is right that freedom of information provisions will apply to the OBR. She spoke about the public interest, and the FOI mechanism is a good one for assessing what is in the public interest. The hon. Lady spoke about minutes, but those who make freedom of information requests will know that there may be other documents; the danger with the amendment is that it may not catch what she wants.

I draw to the hon. Lady’s attention the fact that clause 5 clearly states that

“The Office must perform that duty”—

how it delivers its reports—

“objectively, transparently and impartially.”

If we are going to give the OBR independence, we have to allow it to see for itself how best to fulfil its duty. It may decide that it wishes to publish minutes, but I believe that it is not for the Government or Parliament to tell it to do so.

Kerry McCarthy (Labour, Bristol East)

I thank the Minister again. I have residual concerns, but I shall not press the amendment to a vote. I beg to ask leave to withdraw the amendment.

Kerry McCarthy (Labour, Bristol East)

I beg to move amendment 31, in schedule 1, page 15, line 18, leave out ‘5’ and insert ‘3’.

Roger Gale (Conservative, North Thanet)

With this it will be convenient to discuss the following:

Amendment 32, in schedule 1, page 15, line 40, leave out ‘5’ and insert ‘3’.

Amendment 33, in schedule 1, page 15, line 41, leave out ‘5’ and insert ‘3’.

Amendment 34, in schedule 1, page 16, line 1, leave out ‘5’ and insert ‘3’.

Kerry McCarthy (Labour, Bristol East)

The Minister will be aware that this part of the schedule was substantially amended in the Lords at the Government’s request, after the Grand Committee debate. It now includes the proviso:

“The Non-executive Committee must, at least once in every relevant 5-year period, appoint a person or body to review and report on such of the Office’s reports as the Committee determines.”

All four amendments in this group deal with the same point, a factor that was discussed in the other place when the Government amendments were debated. They suggested that five years is too long. It is important to revisit the question. I have two concerns.

First, if the OBR waits the maximum five years before commissioning an external review of its reports, it will take us beyond the next general election. When setting up a new body, it is important to review its workings at a fairly early stage. I appreciate that there will always be the opportunity for people such as the Treasury Committee to look into the matter, but this provision is about an independent review to be set up by the non-executive committee. It will be an ongoing process, and getting it in motion fairly early in the life of the OBR is important.

Secondly, there are obvious political concerns, particularly if we have five-year fixed-term Parliaments. It is always possible that the external review could be carried out just after the general election, but I believe that it is important to put the OBR under a little more scrutiny before the election to ensure that it is up and running and doing its job properly. It is up to the office to decide when such a review is carried out and I am sure that the Minister will say that it will be a maximum of five years, but there is a danger that the office will decide that it wants to carry on in its own sweet way for as long as possible before asking someone else to pass judgment on it. Giving it five years’ leeway is too long. We believe that it should be three.

Justine Greening (Conservative, Putney)

It is important for the OBR periodically to have an independent external review. As the hon. Lady pointed out, when the Bill was debated in the other place, the question was asked how often the process should take place. We amended the Bill in the light of that debate.

Ultimately, if we have non-executives in place—they are an in-built external check on how the Budget Responsibility Committee is working—we have to allow them the independence to take a view on when external peer reviews should be carried out. As the hon. Lady said, they must be carried out at a maximum of every five years, and it is important that there is a periodic external assessment of how the OBR is working. Of course, there is nothing to stop those non-executives deciding that they want an external peer review earlier than that; for instance, they could decide to commission a review every three years. However, there is no doubt that such external reviews are not the only means by which the work of the OBR can be scrutinised between times.

The OBR’s work will be scrutinised under a package that comprises various factors. There is the duty under clause 5 to act transparently; its work will be open to ongoing challenge and review by well-regarded think tanks and academics whose time is spent commenting on economic matters. There is also a statutory requirement on the OBR to produce an annual assessment of the efficacy of its fiscal and economic forecasts. That will be done in the presence of the non-executives; they will be there on a day-to-day basis, to challenge internally how those forecasts are being done. Behind that, the OBR has said that it intends to establish an advisory panel of experts to support and challenge its work. We spoke earlier about the Congressional Budget Office; these provisions bring us into line with US practice.

The OBR’s integrity depends on whether people believe that it fulfils its role of producing independent, robust and credible economic and fiscal forecasts. In the difficult economic times of recent years, it has been a challenge for independent groups to achieve that, but in an underlying way they will be expected to be robust. The OBR will have every incentive to carry out its work to the highest standards of accuracy. It will set up a panel to advise it, and the non-executives will be there from day to day. We also have the peer review, which will be entirely external, and the OBR will publish its reports. There will be a huge amount of transparency on whether its forecasts and estimates are accurate. We do not need to fetter the responsibilities or decision-making powers of the non-executive directors.

I assure the hon. Lady that she has raised an important matter, but we believe that leaving the Bill as stands will allow us to ensure that the external review happens and is of high quality.

Kerry McCarthy (Labour, Bristol East)

I beg to ask leave to withdraw the amendment.

Kerry McCarthy (Labour, Bristol East)

I beg to move amendment 35, schedule 1, page 16, line 7, at end insert—

I am sure that some members of the Committee will be pleased to hear that this is the last amendment to schedule 1, but it is one of the most important. We have already discussed the matter in passing. It is about the OBR’s budget. The Minister said that a five-year budget had been agreed under the spending review, but given the precedents mentioned earlier of what happens in other countries, I believe that it ought to be subject to some sort of check from outside the Treasury rather than being announced in the Treasury’s spending review. We believe that the Treasury Committee should act as watchdog, to ensure that the OBR is properly funded.

The Minister says that funding is secure for five years. We do not know at this stage quite how much work the OBR will have to do; it will depend on economic circumstances. A certain degree of leeway has been given to the office to undertake additional work, and there is no limit on the number of reports that it can produce. The office may want to revisit the matter before those five years are up and make a plea for extra funding. It should not be a matter for debate between the OBR and the Treasury; the Treasury may say that the OBR has already made far too much noise and ought to be kept in its box. We therefore suggest that the Treasury Committee should be involved.

I am sure that the Minister will seek to reassure us that the Treasury wants the office to be able to do its work to the full, and that it will want to give it the resources to do so. I have already mentioned the concerns expressed in the other place by Lord Eatwell about the Parliamentary Budget Office that was established in Canada in 2008. A year later, after it had produced two reports critical of the Government, its annual budget was frozen, despite earlier promises that it would be boosted by a third. Sweden’s Fiscal Policy Council was set up in 2007 by the incoming Conservative Government, but on 18 November last year the council wrote to the Government pointing out the discrepancy between its remit—what it had been asked to do—and the resources that it had been given. The Swedish Minister of Finance is reported to have reacted negatively, suggesting that the council’s budget be cut.

Sweden and Canada are fairly respectable countries to which we would normally look for examples of best practice; there was another example from Hungary as well, which I will not go into now, not that I am suggesting that it is not as respectable and well thought of as Sweden and Canada. Those are examples of democratic countries that operate in a transparent and accountable way pulling the plug on resources for the equivalent of the OBR when they did not like how it was operating. They did that in the early stages.

I cannot imagine the Minister standing up in public and saying, “We don’t like what you are doing. Therefore I’m going to speak to my friend the Chancellor and take all your money away.” I am sure that she would not be so indiscreet, but there is obviously a danger that the budget could be gradually whittled away, whether by the front door or the back door, to try to hamper the OBR’s work. That is why it is important to ensure in the Bill not just that the OBR is properly funded but that there is check and balance through the Treasury Committee, which should have a remit to ensure that the funding is in place.

Justine Greening (Conservative, Putney)

We agree with the spirit of the amendment to the extent that it recognises transparency, and parliamentary scrutiny of the OBR’s budget. Clearly, parliamentary scrutiny will be a hugely important safeguard of the OBR’s independence. However, the Government have already put a number of arrangements in place to ensure that there is confidence about resourcing for the OBR. Perhaps I could run through them and then back up the fact that they are sufficient by quoting what the current chair has said about the resourcing that he has to run the OBR.

The amendment would give the Treasury Committee an additional role in looking at payments and budgets. Aside from the logistics—it would be extremely difficult for the Treasury Committee to have, in effect, sign-off on the OBR making payments—the Treasury Committee has not asked for those powers, and it would be hard to make them work constitutionally.

In line with the Treasury Committee recommendation, the annual budget of the OBR will be identified separately in the Treasury’s estimate, so it will be available for the Treasury Committee to scrutinise there. The hon. Lady will be aware that the OBR has been provided with an agreed and publicly documented multi-year budget, so the annual budget exercise that she was concerned about cannot be used to exert pressure on it. In fact, that aspect of how the OBR has been set up has been welcomed by the IMF, which has, no doubt, looked at the examples of different countries that she gave and recognised that there is a real problem.

Interestingly, the hon. Lady mentioned the Canadian example. The Canadian parliamentary budget officer was not given an agreed, published, multi-year budget, which I think was one of the reasons why it was easier to reassess that budget downwards, if that is what happened. In the UK, we have set up an independent OBR, and we have been very clear about setting a five-year budget for it which is now in the public domain.

Additionally, in line with the Treasury Committee recommendation, the OBR will also be able to submit to the Select Committee an additional estimates memorandum alongside that of the Treasury in which it can explain for itself the reasons for changes in the available budget for the year ahead. The Bill gives the OBR’s non-executives a duty to report on anything that appears to them to constrain the OBR’s discretion, which could include any attempts to control the OBR by manipulating its budgets. I understand what the hon. Lady is trying to achieve with the amendment, but I do not think that it will deliver anything over and above the safeguards that are already in place.

My other concern is that, in expanding the role of the Treasury Committee, we could end up with a situation in which the Committee, having signed off on various payments made by the OBR, finds itself being summoned to the Public Accounts Committee, which might decide to inquire into the financial running of the office. That would start to muddy parliamentary scrutiny.

Finally, the Chair of the Treasury Committee, speaking of his ability to look at the financing and funding of the OBR, said:

“It is vital that the OBR has the resources it needs. The Committee will monitor this carefully: the Terms of Reference suggest that the Treasury accepts the importance of transparency and separate disclosure, and we will have the information we need to do our work.”

He clearly feels that he has enough transparency to do his job. There is the question of whether the amount in place will allow the office to do its statutory duty, and the hon. Lady made the point that one can ask someone to do something and then not give them the resources to do it. The chair of the OBR has already made it clear that he feels that he has adequate resource, and has said that he will promptly raise any funding issues with the Treasury Committee. In talking before the Committee he said:

“If you accede to my appointment and I find myself being squeezed in that way, this Committee will be hearing about it very promptly. That’s how we make that public and ensure that those sorts of pressures do not go unremarked.”

We have the right safeguards and the right people in place to ensure that the risk that the hon. Lady rightly identifies will not be realised in practice. I hope that, with that reassurance, she will withdraw the amendment.

Kerry McCarthy (Labour, Bristol East)

I beg to ask leave to withdraw the amendment.

Clause 11

Chris Leslie (Labour, Nottingham East)

It is probably worth noting that we are moving on to part 2 of the Bill, which is about amendments to and reforms of the National Audit Office and the office of Comptroller and Auditor General, and to the architecture that accompanies those important elements of our constitution, which oversee the sound and prudent use of public money. In many ways, the NAO and the work of the CAG and the Public Accounts Committee are more important and far more serious than the subject of some of the discussions that we have had today, but because they are of long standing—I think that the Comptroller and Auditor General post has existed since 1866—they often pass without much comment.

The term “comptroller” is derived from a conjunction between the English word “controller” and the French word for account—“compte”—and hence the notion of the “controller of accounts” was set up. In Welsh, as stated in the Bill, the term is Rheolwr ac Archwilydd Cyffredinol. This is an important appointment, and I am glad that the office will continue and that the appointment will be made by Her Majesty in response to an address of the House of Commons, prompted by a motion from the Prime Minister. Those are fundamental issues. This whole part of the Bill, in some ways, reflects a rather unfortunate piece of the most recent history of that office respecting certain expenses, accounts, allowances and so forth that were reported in the British media, prompting many people to query whether the structures for checking expenses and the accounts of the office of the CAG were adequate. The Public Accounts Commission commissioned John Tiner to do an inquiry and review.

As a consequence, a series of recommendations were made, including a set of reforms to the law, which the previous Labour Administration sought to put into what is now the Constitutional Reform and Governance Act 2010, but due to the wash-up before the general election, there was no time to give the provisions full and proper scrutiny, so the Government rightly brought them forward and appended them to the Bill. The new structures are already in place. As with the OBR, we are essentially doing a bit of post-hoc scrutiny, given that the new arrangements are up and running but we are here debating the legislation. I always dislike that approach to legislation slightly—I find that I would rather legislate before changes happen—but it seems to be a recent trend in certain circumstances. I suppose needs must.

I was a member of the Public Accounts Committee 13 years ago—I think before nearly any other Committee member had been elected to this place. It shows my age. Obviously I am getting on in years.

Alec Shelbrooke (Conservative, Elmet and Rothwell)

You were very young.

Chris Leslie (Labour, Nottingham East)

I thank the hon. Gentleman for that. I was hoping somebody would say it. I will thank him later as well.

My specific point on clause 11 concerns the change taking place to the tenure of the office of the CAG. Committee members will see on page 4 of the Bill that the person appointed holds office for 10 years and may not be appointed again. It is a single term of appointment, for a decade, and is not renewable. That is a change. Sir John Bourn, a distinguished Comptroller and Auditor General with whom I worked on the Public Accounts Committee, held the post for 20 years in total. I suspect that, partly to reflect the Tiner review, Ministers and others thought that if we were legislating, we should take the opportunity to consider that tenure of office.

Will the Minister explain why 10 years was chosen? It might have been debated in the other place. One anxiety that has been voiced is whether that length of tenure will affect the type of candidate who may be deemed appropriate for appointment or may apply. Obviously, it is a long period in office, but because office holders cannot be reappointed, it would be a significant career choice for an individual to apply for the role. Provisions later in the Bill prevent an individual from working for the Crown, for example, for at least two years thereafter, so doing that job would mean working for 10 years and then moving on to an undetermined something else. Does the Minister have any observations about the career attractiveness or otherwise of the construct? It does not seem massively objectionable to me, but it is quite unusual for a public office. We will come to other aspects of the legislation as the clauses progress.

Justine Greening (Conservative, Putney)

It might be the right moment for me to give some background to this part of the Bill. Overall, the coalition programme makes it clear that the Government will take significant steps to increase the transparency of public spending to enhance accountability. The first stage, which we have been debating in the first part of the Bill, is to subject the Treasury’s fiscal judgments to external scrutiny by making economic and fiscal forecasts independent.

The same applies to the scrutiny of public expenditure. Modernising the governance of the National Audit Office will also help advance those coalition Government objectives. The provisions in part 2 strengthen the resilience and integrity of the body that is best placed to assess the Government’s use of public funds. Effective independent oversight of the efficiency of Government spending will be particularly important when public resources are under pressure.

Part 2 implements the recommendations in the Public Accounts Commission’s 15th report. Its proposals were designed to balance two considerations: the need to ensure that the CAG has the authority to form completely independent judgments about the audits and value-for-money studies conducted by the NAO; and the need for the NAO to maintain systems of governance and internal controls that are consistent with best practice. The provisions in part 2 introduce a number of checks and balances to achieve those aims.

In summary, part 2 modernises the governance arrangements for the national audit. It continues the office of the CAG as an independent officer of the House of Commons, but limits the term to a single appointment of 10 years. I shall answer the hon. Gentleman’s questions about that in a moment.

Part 2 provides for the establishment of a new corporate body, the new National Audit Office, the functions of which will include providing resources for the CAG’s functions, monitoring how those functions are carried out and approving the provision of certain services. Importantly, it will be able to support and challenge constructively the CAG’s decisions without, of course, preventing him from carrying out his statutory responsibilities.

The NAO will have a majority of non-executives and will be led by a non-executive chair. The CAG will be the chief executive, but will not be an employee of the NAO . It is important to stress that, within the new governance framework, the CAG will continue to have complete discretion in forming audit judgments and carrying out value for money studies. Schedules 2 and 3 set out details on the new NAO and the relationship between it and the CAG.

Clause 11 is straightforward in that it provides for the office of the CAG to continue. It carries forward the appointment process in section 1 of the National Audit Act 1983, under which the CAG is appointed by Her Majesty by letters patent, following an address in the House of Commons. It is a legal requirement that the Prime Minister agree the appointment of the CAG with the Chairman of the Committee of Public Accounts. The choice of CAG will continue to require cross-party agreement.

To address the point made by the hon. Member for Nottingham East, subsections (6) and (7) limit the term of office to a single 10-year appointment instead of the current unlimited term. A time frame of 10 years is significant, but it gives the incumbent time to settle into the role and to become a strong and effective leader. On the other hand, it mitigates the risk of the office becoming too closely aligned with the personality of a single individual. Refreshing the leadership of an organisation at appropriate intervals is widely recognised as a driver to improving performance.

Chris Leslie (Labour, Nottingham East)

I have always been sceptical of term limits, perhaps because I began a particular career choice early on in my working life. When people suggested that Members of Parliament should be appointed only for two terms, or that Prime Ministers should serve for a fixed term, I always thought that that would fetter the choice of the public if there were a really good candidate. In many American presidential elections, potential presidents have been unable to be appointed, even though they were popular. Is the Minister certain that term limits, as a principle, are a good thing?

Justine Greening (Conservative, Putney)

It is probably unwise for me to make broad comments that do not relate to this role. That would be an entirely different debate about roles that might have different requirements. The hon. Gentleman’s points about politics are separate from the situation that we are discussing; in the case of the CAG it is right to have a single term. High-quality candidates will always be available to carry out the role. There is no question of the CAG seeking reappointment. That means that there is no danger, either in reality or perception, that his or her judgments will be compromised as the period for the renewal of their term approaches. The clause reflects the position of the Public Accounts Committee as set out in its 15th report.

In terms of how our approach compares with that of other countries, many other countries have fixed-term appointments for their similar auditor generals. In Norway, the fixed term is five years, but in the United States it is 15. By setting a tenure of 10 years we have hopefully got it about right. It is a substantial role that needs a substantial person in it. That tenure will give them time to come into the role and develop the leadership that they need.

Clause 13

Chris Leslie (Labour, Nottingham East)

The clause is about the remuneration arrangements for the Comptroller and Auditor General, and how those arrangements are to be made. Will the Minister put on record the CAG’s salary? Why are the remuneration arrangements to be made between the Prime Minister and the Chair of the Public Accounts Committee, rather than with that Committee itself? I understand that the PAC used to have a role as it is a Committee of the House of Commons, but that has now been limited to the Chair.

There are a number of interesting provisions in the clause. Subsection (6) seems to suggest that the pension arrangements are wholly under the Treasury’s control. That seems slightly at odds with the salary arrangements, but I may have got that wrong and be misreading the legislation. A reasonable recommendation was made by, I think, the Public Accounts Commission that the CAG’s salary be tied in law—pegged—to the salary of the Permanent Secretary of Her Majesty’s Treasury. That seems a reasonable provision, but it did not make it into the Bill. Will the Minister explain why?

The provisions were debated in the House on 4 November 2009, before the general election. They were pretty much in the form in which they exist today, with a couple of small exceptions. The current Exchequer Secretary to the Treasury, then in opposition, proposed an amendment. Given the attention that had been paid to the CAG’s allowances and expenses, he moved an amendment proposing that all remunerations and allowances should be published monthly online so that there would be more transparency about them. That amendment was put to the vote in the House, and the Minister, as she now is, voted in favour of it during that debate. Unless I am missing it, however, that provision does not seem to have made it into the legislation before us. Will the Minister explain why just over a year ago she thought it was necessary for the CAG’s remuneration and allowances to be placed online on a monthly basis, and why she has now changed her mind? Will she explain why the arrangements in subsection (8) are subject to the negative procedure rather than the affirmative one?

Justine Greening (Conservative, Putney)

The clause provides for the determination of the CAG’s remuneration arrangements. Those provisions have been prepared with a view to the overriding requirement of preserving the independence of the office, in order not to constrain the CAG’s operational decisions. The hon. Gentleman raised a number of questions, which I will come on to in a moment.

On what is contained in the clause, it provides that the remuneration arrangements have to be agreed in advance by the Prime Minister and the Chair of the Committee of Public Accounts; that it can include an automatic uprating during the term of the CAG’s appointment; that it precludes performance-based incentives, in order to preserve the CAG’s operational independence; and that, as of now, it is to be charged on and paid out of the Consolidated Fund, with no need for the resources to be voted on annually by Parliament. The main change to the current arrangements relates to the requirement for the remuneration arrangements to be agreed between the Prime Minister and the person who chairs the Committee of Public Accounts. There will no longer be a direct link to a particular salary or salary range.

The hon. Gentleman asked about linking salary with that of permanent secretaries, but there are a number of them.

Chris Leslie (Labour, Nottingham East)

I referred to the Treasury.

Justine Greening (Conservative, Putney)

The hon. Gentleman says that, but as and when the Treasury has a new permanent secretary, they may be paid less than the current one. There is, therefore, no rate for the job, either across Departments at the moment, or in roles going forward. We try to get over that by ensuring that we set the salary at an agreed level, at the beginning of the CAG’s employment, and alongside that we have a suitable uprating mechanism so that any incoming candidate understands what the remuneration will be.

Turning to some of the detailed provisions, subsections (1) and (2) provide that the CAG will have remuneration arrangements that may include an annual salary, allowances, provision for a pension and other benefits. As I have said, the remuneration arrangements have to be agreed by the Prime Minister and the Chair of the Committee of Public Accounts before the CAG is appointed.

The hon. Gentleman asked about the salary of the present CAG, Amyas Morse. Mr Morse is paid a salary of £210,000 per annum. That will be uprated each year on the anniversary of his first day of office, in line with the consolidated pay increase of the senior civil service. As the senior civil service will not receive consolidated pay increases for the next two years, Mr Morse’s salary will remain at that level. The hon. Gentleman asked about the pension. I understand that Mr Morse has opted not to receive a pension.

Chris Leslie (Labour, Nottingham East)

The Chancellor has, on a number of occasions, voiced his disquiet about salaries in the public sector that are higher than that of the Prime Minister. Is the hon. Lady content with that level of salary?

Justine Greening (Conservative, Putney)

The rate that has been set is one that has been agreed by all parties. The hon. Gentleman wanted to link the salary rate of the CAG to that of permanent secretaries. Permanent secretaries receive between a minimum of £140,000 and a maximum of £273,000, which is clearly a wide range. He makes a good point on salary levels, which is one reason I made the point to him that maybe over time, as we get incoming permanent secretaries, that range will narrow.

It is right to have transparency. The hon. Gentleman asked about publishing details, but I think that he would recognise that this Government have pushed Whitehall and local government to publish more details about spend. I hope that at some point in the future he will be able to encourage his local council, Nottingham, which is the only one in the country that refuses to publish details of its spend, to do so.

On broader CAG spend, that is published regularly on the NAO website, as are the expenses of senior officials. I think those are published half-yearly, so there is transparency there, and I urge the hon. Gentleman to achieve that transparency with his local council too, because it is important, as he points out. Maybe it will be prepared to publish all those details on a monthly basis—we will see if he has the powers of persuasion to get it to do that over the coming weeks.

I have probably answered many of the hon. Gentleman’s questions. Subsection (4) provides for the CAG to continue to be eligible for a civil service pension, although we have heard that the incumbent has elected not to. Subsection (6) allows the Treasury to make regulations for purposes that are supplementary to any agreed pension arrangement.

Chris Leslie (Labour, Nottingham East)

I asked the Minister to explain why arrangements under subsection (8) would be made under the negative statutory instrument procedure.

Justine Greening (Conservative, Putney)

To reassure the hon. Gentleman, that process is exactly the same as it was before; there is no change. It was set out in the Superannuation Act 1972, so it is of relatively long standing. I commend the clause to the Committee.

Chris Leslie (Labour, Nottingham East)

I shall not rise to the bait thrown before me about Nottingham city council. Obviously I do not run it; nor is it featured in the Bill as far as I can see. I have no problem with transparency in public funds; I only wish that Government Departments would also publish all spending above £500 online, but they will not. I think about £25,000 is as far as they have come down.

I do not want to labour the point about the salary of the CAG, because obviously we can come back to this at another time, but it seems unusual for this Administration—having made such a great fanfare about tackling high salaries in the public sector—to be actively legislating, but not taking the opportunity to do something about high salaries when they are before us in the clause. The Minister did not say whether she was content with this particular salary level, so I am none the wiser as to whether the Chancellor is going to haul the CAG before him. He seemed to suggest before and after the general election that he would do that before he granted permission for any public office to have a salary higher than the Prime Minister’s. We will wait and see whether the CAG will have to come and account to the Chancellor because he is to be paid more than £142,000. Obviously the Chancellor has some say in the remuneration arrangements. However, while we may return to this matter at a later date, I think we have debated it sufficiently.

Clause 15

Chris Leslie (Labour, Nottingham East)

The clause relates to what might be known as the revolving-door problem, where holders of certain offices are prevented from working for the Crown when their office is terminated or they leave. That is perfectly reasonable in many ways. However, there was some debate in the House of Lords about why the period of two years was chosen to prevent a person ceasing to be CAG from holding Crown office. I think there was an original proposal by the Commission that the ban should be for life—that the person leaving should never be able to hold Crown office—but that was reduced to two years.

My noble Friend Lord Touhig proposed an amendment to strengthen the provisions in respect of the sort of occupations that it was felt appropriate for a former CAG to hold by referring those cases to the Advisory Committee on Business Appointments. The Minister will know that, when she leaves her ministerial office in the not-too-distant future, she will have to apply for permission to the advisory committee if she wishes to take up office after she has left her political career. That applies to a number of senior posts in the public sector, but such a stipulation is not in the Bill. It seems slightly unusual that it has not been referenced. I think the Government tabled an amendment to try to allow the Public Accounts Commission to specify what sort of advisory arrangements would be appropriate, but I am still not convinced that the absence of the advisory committee is a good thing for the clause. Will the Minister think again about that?

Justine Greening (Conservative, Putney)

As we have heard, clause 15 sets out restrictions on the employment of former holders of the office of Comptroller and Auditor General. It might be helpful to go into some of the points that the hon. Gentleman raised about why we put in place the period of two years. Clause 15 restricts the former CAG from working for the Crown or providing services to persons acting on behalf of the Crown for a period of two years after they cease to occupy that role. We think that is a proportionate way of meeting the objective of protecting the independence of the CAG’s office.

The hon. Gentleman asked about the current incumbent’s salary. I should point out that he was recruited in June 2009, so that was probably when his generous salary was agreed. The Public Accounts Commission has recommended a five-year ban, but there is a problem with that.

Graham Jones (Labour, Hyndburn)

Is the Minister suggesting that the generous payment is too much?

Roger Gale (Conservative, North Thanet)

That issue has already been dealt with. The hon. Lady introduced it again, but I do not think it is provided for in the clause. However, if the hon. Lady wishes to reply, she may do so.

Justine Greening (Conservative, Putney)

I was merely adding to the debate and clarifying the issue for the hon. Member for Nottingham East. It is relevant to the Committee to know the time at which the decision on pay was made, because the hon. Gentleman was effectively trying to say that somehow the Government had not taken the right approach in setting the salary level.

To return to clause 15, a two-year employment restriction, with a related requirement to seek advice after that period, is necessary to protect the independence of the office, without making a former CAG subject to disproportionate restrictions in their ability to work. A five-year ban could result in discouraging candidates, particularly younger ones, from applying. We do not want the post to become a role that somebody does before they retire, for example.

There is just one exception to the two-year ban. Subsection (7) allows a former CAG to hold office as Auditor General for Wales or for Scotland and as Comptroller and Auditor General for Northern Ireland. It would seem perverse for former holders of that office to be denied the opportunity of making their experience and knowledge available to the devolved Administrations if they so wish. Apart from that, we think that a two-year period of restriction gets the balance right. It ensures that their independence is not compromised when they leave office, and it is not so long that it would discourage candidates from applying for the position in the first place.

Chris Leslie (Labour, Nottingham East)

I asked the hon. Lady why reference to the Advisory Committee on Business Appointments had not been made. It would seem appropriate for that to apply here, as it does to other public offices.

Justine Greening (Conservative, Putney)

There was no need to put that in the Bill. The clauses clearly establish the way in which the person who has previously been in the role of CAG can go forward should they wish to go into a role that may conflict with their previous position. That is unlike the position that exists for MPs. People who have been Ministers can take roles, but the advisory committee looks at whether those roles are restricted. In this case, it is very clear cut that a full two-year ban is in place. The process maintains the independence of the role of the CAG.

Clause 16

Chris Leslie (Labour, Nottingham East)

This is a short clause about the services that the Comptroller and Auditor General may provide in any place within or outside the United Kingdom under agreements or other arrangements that they enter into.

I suspect that this clause relates primarily to audit support for other domains and territories and so forth. Given that the Government have decided to abolish the Audit Commission, which clearly has had a role in auditing local authority activities in England and Wales for a considerable period, and given that there is an opportunity for the National Audit Office potentially to take on some of those residual but necessary audit and scrutiny functions that the Audit Commission formerly pursued, I take it that this clause also then allows the NAO to extend some of its scrutiny role into local public service activities as well as Whitehall and other Departments. Will the Minister confirm that?

Justine Greening (Conservative, Putney)

The thinking behind this clause was mentioned by the hon. Gentleman when he started his comments. As he pointed out, the NAO supports a wide range of international institutions. Some of its work can be helping to build up financial management and audit skills. He mentioned that it can work in different countries—Vietnam is one example—as well as auditing a number of international organisations such as the World Food Programme. He will be aware that the NAO also supports and encourages the professional development of the international community of audit offices. The Comptroller and Auditor General has been elected to the UN board of auditors, which is responsible for auditing the United Nations.

Closer to home, the NAO also provides support to a number of Select Committees, including the Public Accounts Committee. That is the backdrop to clause 16. The hon. Gentleman asked whether there is any link to the Audit Commission. Ultimately, the Secretary of State for Communities and Local Government is taking forward work to create a new local audit framework. This clause is not designed to tackle that. Future local audit arrangements will allow local authorities to appoint their own auditors, and it is proposed to move the Audit Commission’s in-house practice to the private sector. Some services that are currently being carried out by the Audit Commission will in future be done by the NAO, but the arrangements in this Bill are purely about modernising NAO governance, so no additional audit or value-for-money responsibilities are being given to the NAO. I hope that that is clear.

Clause 20

Chris Leslie (Labour, Nottingham East)

Many people may be surprised by the clause. People may think that the National Audit Office has been in existence for a long time, but if we look at the swirling mists of the British constitution, such as it is, with its still-undefined character, we see that in many different ways the NAO has never found its way properly on to a statutory footing, so the clause will create a body corporate called the National Audit Office. The clause also triggers schedule 2, which hon. Members will see is a quite a considerable schedule at the back of the Bill, detailing what the NAO shall do.

As I mentioned earlier, the Tiner review, and the set of circumstances that prompted the thinking about modernising the governance and constitutional arrangements of the Comptroller and Auditor General, the NAO and the scrutiny of the UK’s public accounts, have opened the box on a number of different areas, and we welcome the modernisation process. However, a number of anxieties have been voiced at different times about certain aspects; for example, it has been suggested that parliamentary oversight of the NAO and the CAG may be unwittingly diminished by the creation of a whole panoply of boards of directors and executive and non-executive directors for the NAO, and accountability will in some cases be redirected. I think Professor David Heald, a former adviser to the Public Accounts Commission, said that when the NAO begins to negotiate internally between its board and the CAG, there will be fewer opportunities for the PAC, and by extension the House of Commons, to have the same effective right.

I am not quite clear that I agree with the professor’s view, but there have been criticisms of all that activity, not least by the noble Baroness Noakes, a Conservative peer who suggested that the House of Commons ought to have pulled its finger out when the expenses and allowances issue arose for the CAG. That perhaps showed that the House of Commons procedures for keeping close account of what was going on were lax, and that it was creating all the arrangements almost as an excuse. She described the arrangements as

“a costly and cumbersome superstructure of a board and non-executives.”—[Official Report, House of Lords, 8 November 2010; Vol. 722, c. 26.]

To a certain extent, I sympathise with her anxieties. Will the Minister put on record her estimate of the total costs of creating the board, the non-executive directors and the new governance arrangements? On balance, the arrangements are probably necessary, as there is an expectation that that is the modern way of doing business. However, Baroness Noakes made a fair point: the legislation is not exactly light touch. It is belt and braces, and there is a cost involved. It would be illuminating if the Minister could give a figure. Obviously, there are a number of issues that we will come to in schedule 2.

Roger Gale (Conservative, North Thanet)

I was just going to say that it might be helpful if we got clause 20 out of the way, and then Members can thrash out the meat of the matter under schedule 2.

Justine Greening (Conservative, Putney)

The hon. Gentleman mentioned a number of points that I am sure we will come on to in schedule 2. He is right to say that at the moment, the National Audit Office is not a corporate body, and the clause will establish it as a new corporate body. He is also right that there is a range of issues on governance, structure and constitution related to the establishment of the NAO as a separate legal body. However, I think we should proceed to schedule 2, where we can debate some of the issues.

Schedule 2

Chris Leslie (Labour, Nottingham East)

Essentially, I wish to reiterate—I mentioned this in debating the previous clause—that if the Minister is able to give us a sense of the total cost of the governance structures and arrangements, it would be useful. There are a number of other little observations that are worth mentioning. We had an interesting debate earlier about how it was exceptional and perhaps inappropriate for the Treasury Committee to have oversight of the appointment of non-executive members of the OBR. However, I note that, under schedule 2, all non-executive members of the NAO are to be appointed by the Public Accounts Commission. That is obviously a slight problem in her argument. There are parliamentary processes regarding the appointment of non-executive members. If the Minister could explain the consistency of her argument on that point, it might be useful.

There are no restrictions under part 4 regarding terms of appointment—determination of appointment—on the severance or compensation provisions. In fact, there is no mention at all of severance or compensation provisions. As I read the Bill, whereas in relation to the OBR the Treasury is taking a power in a general sense to make a payment in those circumstances, there is no provision for payment at all to be made on the termination of appointments. Therefore, I am assuming that whether because of voluntary or compulsory removal from office or departure from office, no compensation would be allowable for those persons either appointed to the board or employed at the NAO. That might be something that has been accidentally missed from the drafting. Obviously, we have time to address those things. By and large, the provisions seem otherwise to be fairly straightforward.

Justine Greening (Conservative, Putney)

As the hon. Gentleman has pointed out, schedule 2 sets out the various details of the National Audit Office’s constitutional functions, including rules on its membership, status and the appointment of members and staff. There are several different parts to that, as the Committee can no doubt see. He raises the question of whether all this governance will be somehow unwieldy in relation to Parliament’s role in scrutinising. That is a fair point to make.

I, too, have a huge amount of respect for Baroness Noakes in the other place. She has raised the issue of the challenges and concerns surrounding the expenses of the previous incumbent. She also referred to how, at the time, the House of Commons had not picked up on that or expressed concern. It may be that, with hindsight, we will see that the challenges that Members of this House had surrounding their expenses were part of the backdrop to an environment in which it was felt that the CAG’s expenses were not something to be raised. However, schedule 2 sets out a strong governance structure for the NAO.

The hon. Gentleman also asked about the total cost of change and of setting all this up. I do not have a specific figure for him right now, but I am happy to write to him with that. Our expectation is that the cost will be very small. As he is aware, there is already an NAO; it is just not a body corporate. In many respects, we are putting in place in legal footing for something that is already there. I take on board that point, but I suggest that the costs will not be excessive.

On the rest of the questions that the hon. Gentleman raised on parliamentary oversight, I should point out to him that the Public Accounts Commission will have to hold accountable not just the CAG—who is, of course, chief executive of the NAO—but the NAO chair. The Bill increases the Commission’s scrutiny role by requiring it to approve more of the NAO’s work than it did in the past. That includes the NAO strategy, the estimate, the code of practice on the relationship between the CAG and the NAO in paragraph 10 of schedule 3, and the annual report. He is right to point out that there is a desire to ensure that we are clear-cut about how the NAO will work alongside the Comptroller and Auditor General, and how both those roles will work alongside Parliament.

Finally, the hon. Gentleman asked about non-executive appointments to the NAO being made by the Public Accounts Committee. That happens because the NAO and its members are Officers of Parliament. The OBR is entirely independent and is a non-departmental public body. That is the reason for the difference, although he was right to pick up that point.

Chris Leslie (Labour, Nottingham East)

I sense that the Minister is winding up, but there was a specific point about compensation and severance arrangements; I could not see provision for that in the Bill, and I am anxious that that might fetter the Treasury’s ability to make those payments. If she wants to write to me on the subject, I am content with that.

Justine Greening (Conservative, Putney)

I will write to him on that. The commission will decide on the remuneration of the other non-executive members, but I will address his particular issue on severance in a letter.

Schedule 3

Chris Leslie (Labour, Nottingham East)

Schedule 3 sets out the relationship between the National Audit Office and the Comptroller and Auditor General. Given that this complex architecture is being established, it was felt that a set of memorandums of understanding, codes of practice and so forth needed to be established so that the workings could be clear. The situation is becoming slightly convoluted because of the number of players involved, including the Public Accounts Committee, the Public Accounts Commission, the Prime Minister, Her Majesty, the Comptroller and Auditor General, the NAO, the chair of the NAO—Members will get the sense that this is a complex process. By and large, we can see that the code of practice that is being set up is needed.

There are a couple of points that I want to make. Paragraph 4 of schedule 3 states:

“NAO must, in such manner as it considers appropriate, monitor the carrying out of the Comptroller and Auditor General’s functions.”

Paragraph 5 states:

“The Comptroller and Auditor General must have regard to any advice given.”

That is behavioural monitoring by the NAO of what the CAG does, even though the CAG is the chief executive of the NAO. I get the sense that an organisation, subordinate to its chief executive, has a monitoring role of that chief executive. There may be some circularity of accountability there, but perhaps the Minister will elaborate. For example, I do not see any reference to the role that the Public Accounts Committee or the commission might play, although they might have been more appropriate bodies to do the monitoring; that was my first point.

My second point relates to the code of practice. There are several provisions that it might cover, but the schedule mentions a provision

“restricting the public comments that a non-executive member of NAO may make in relation to the carrying out of the Comptroller and Auditor General’s functions.”

In other words, people appointed as non-executive members of the NAO will be gagged when it comes to discussing the carrying out of the Comptroller and Auditor General’s functions. I do not know what circumstances the Minister envisages. Why would we need to restrict the making of public comments by a non-executive member of the NAO? The whole point of non-executive appointees is often to provide a challenge and a level of scrutiny to ensure that there is a balanced point of view. Essentially muffling the voice of the non-executive members seems entirely counter-intuitive. That is on page 29, line 19. Those were my only two queries about the schedule.

Justine Greening (Conservative, Putney)

Schedule 3 is crucial because it sets out where and how the NAO will work with the Comptroller and Auditor General. It would probably be worth while if I explained the principles set out by the Public Accounts Commission that led to the arrangements in the schedule. The proposals by the commission were designed to balance two considerations: the CAG needs the authority to form completely independent judgments about audits and value-for-money studies conducted by the NAO, but at the same time the NAO needs to maintain systems of governance and internal control that are consistent with best practice.

The governor’s framework set out in the schedule is designed to ensure that in delivering the CAG’s independent audit judgment, the NAO and the CAG are themselves operating to the best standards of probity and efficiency. Paragraph 10(2) reflects the principle set out in clause 17(1) and (2), which grants the CAG complete discretion, subject to any limitations agreed by the commission, the NAO and the CAG.

The schedule provides for the NAO to provide resources for the CAG, but as the hon. Gentleman said, it also gives the NAO a duty to monitor, and form a relationship with, the CAG. Further details on how the relationship will work are set out in the code of practice, which is prepared by the NAO and the CAG and approved by the commission. The schedule also sets out where the Public Accounts Commission, on behalf of Parliament, has a role in regulating the relationship between the CAG and the NAO.

The hon. Gentleman asked about the potential conflict of interest that arises from the fact that although the CAG is the chief executive of the NAO, the NAO has a role in monitoring the CAG. The monitoring is really part and parcel of the NAO’s role in providing the CAG with advice and support. Ultimately, the Public Accounts Commission will hold the CAG to account. That is the point that Baroness Noakes was making when she questioned whether that had happened in the recent past. The NAO’s duty to monitor is necessary because it is a body that does things, as well as a body that advises. That is the reason for that aspect of schedule 3.

The hon. Gentleman mentioned his concern about the restriction on public comments by non-executives of the NAO. We do not want the non-executives to undermine the authority of the CAG by going public, but I can assure the hon. Gentleman that there is an opportunity for non-executives to make their point; however, that needs to be done in the meetings of the NAO board, rather than in the public domain. That is really more of a professionalism safeguard to make sure that the authority of the CAG is not unwittingly undermined.

Schedule 5

Chris Leslie (Labour, Nottingham East)

I have only a minor point, which is probably the final point in the debate on the Bill. I am curious because page 38 contains a number of changes to the Corporate Manslaughter and Corporate Homicide Act 2007, and simultaneously IPSA is mentioned in paragraph 33. As hon. Members know, I should not have mentioned that acronym in Committee. That now means that the sky will fall in and the performance has been jinxed.

The provisions stretch quite a long way. Am I correct in presuming that the NAO has a role in auditing IPSA? I note that a provision is made about some of the board members of IPSA needing certain qualifications to be eligible, and I am not sure whether that has been spotted in the past. I raise this only because I thought that it would be interesting to Members.

Justine Greening (Conservative, Putney)

The hon. Gentleman has raised a couple of interesting points. In setting up the new corporate body for the NAO we need to ensure that the other laws into which it needs to fit are amended as appropriate. This part of the schedule contains a series of consequential technical amendments to existing legislation, which ensure that the establishment of the new NAO on a statutory footing fits into the existing legal framework of other Acts.

The hon. Gentleman has briefly mentioned IPSA. The qualification to be a board member was apparently defined by the reference to qualification to be able to audit the NAO.

Clause 31

Justine Greening (Conservative, Putney)

I beg to move amendment 1, in clause 31, page 10, line 13, leave out subsection (2).

Having debated the Bill, we no longer need the original section of the Finance Act. The Committee will be aware that much of the original legislation that established the code for fiscal stability, for example, was set out in an earlier Finance Act. Because the Bill overrides and renews what was in the code by setting up not only the Office for Budget Responsibility but the charter, we can now effectively rescind that previous legislation.

Regarding amendment 1, when a Bill starts its passage in the House of Lords a privilege amendment is inserted by the Lords at its final printing. By claiming that nothing in the Lords’ Bills imposes a charge on the public funds or on the people, the amendment preserves the financial privilege of the Commons to authorise such charges. Once a money resolution has been passed by the Commons to authorise a charge on public funds, which for this Bill took place after Second Reading in the Commons, the privilege amendment is routinely removed by the Commons at the first opportunity, having served its purpose, in other words when the Bill is in Committee.