David Howarth (Cambridge, Liberal Democrat)

I beg to move amendment 29, page 20, line 33, leave out 'specified person' and insert 'Advisory Committee on Public Appointments'.

The First Deputy Chairman:

With this it will be convenient to discuss the following: amendment 30, page 20, line 35, leave out subsection (3).

Amendment 31, page 20, line 36, leave out subsection (4).

David Howarth (Cambridge, Liberal Democrat)

The amendments relate to discrepancies between the contents of the Bill and the Public Accounts Commission report. I want to give the Government an opportunity to explain the difference between the two.

Amendments 29 and 30 are simply about who is to be consulted before the Comptroller and Auditor General is allowed to undertake any further employment after the end of his period in office. The commission said that the Advisory Committee on Public Appointments had to be consulted, whereas the Bill says that some "specified person" who will be

"specified from time to time by the Commission"

must be consulted. The Bill is therefore less specific than the recommendation from the commission.

Clearly, the provision is important, and public confidence in the office of Comptroller and Auditor General must be maintained. It is possible for conflicts of interest apparently to arise in almost any sort of future employment—not just in organisations previously subject to the audit powers of the Comptroller and Auditor General, to which the rest of the clause applies, but those in the private sector. My first question is "Why has that change been made?"

My second question relates to an even bigger difference between the commission's recommendation and what is proposed in the Bill. It concerns circumstances in which the Comptroller and Auditor General, after leaving office, proposes to take up employment with a body that has previously been within his or her jurisdiction for the purposes of audit. The Bill imposes an absolute ban on such appointments for a limited period of two years.

The commission, taking a much stricter view, suggested a lifelong ban, stating:

"It is obviously essential that subsequent employment could not be seen as a reward for actions taken while C&AG, and for that reason there should be a lifetime prohibition on a C&AG or former C&AG accepting any post in any body which the NAO has audited or which is in the gift of the Government."

Given the very proper concerns that have been expressed throughout the debate about the independence of the Comptroller and Auditor General and the commission's clear recommendation of a lifetime ban, I simply ask the Government why they have opted for such a short period.

Alan Williams (Swansea West, Labour)

The proposal relating to the advisory committee is certainly what we originally recommended. I think it was then suggested that there might be a more appropriate body at the time, and that the arrangement should therefore be left open. It was not a case of precluding what had been proposed originally; it was merely a case of leaving things open so that a decision could be made at the time.

We considered the lifetime ban, along with various other options. The Treasury's advice was that a lifetime ban would be an infringement of human rights and was disproportionate, but also that it would deter younger applicants looking 10 years ahead who might feel that their options would be severely limited when they retired.

Sarah McCarthy-Fry (Parliamentary Secretary, HM Treasury; Portsmouth North, Labour)

As we have established this afternoon, the office of the Comptroller and Auditor General was set up to hold Government to account. We have legislation that enshrines in law a requirement to ensure that the Comptroller and Auditor General is, and is seen to be, independent of any and all outside influence, particularly that of the Executive. The arrangements for appointment, remuneration and removal from office in the national audit provisions of the Bill are intended to ensure that external considerations cannot influence the judgments that the Comptroller and Auditor General needs to make in scrutinising the Government's use of public resources on behalf of the House of Commons.

That sets clause 42 in context. Let me now turn to the amendments, beginning with amendment 31. Clause 37, to which the Committee agreed earlier, limits the Comptroller and Auditor General's term of office to a maximum 10-year single term. It is likely, therefore, that a Comptroller and Auditor General could have a lengthy working life once he had left office. Mindful of that, the Government have put in place measures to ensure that the hope of future employment could not influence a Comptroller and Auditor General's judgments while in office. That consideration was also important to the Public Accounts Commission, from whose proposals the provision derives.

The CAG needs to focus all his efforts on carrying out his role without fear or favour right through to the end. Clause 42 therefore restricts a 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 be CAG.

Andrew Tyrie (Chichester, Conservative)

Will the definition of working for the Crown be the same as the definition that will be used for determining who is a civil servant under the civil service clauses of the Bill?

Sarah McCarthy-Fry (Parliamentary Secretary, HM Treasury; Portsmouth North, Labour)

Off the top of my head, I cannot guarantee that, but I will endeavour to get a response to the hon. Gentleman before I finish speaking; alternatively, I will write to him.

After two years, a former CAG must take advice from a person nominated by the Public Accounts Commission before taking up other employment of a kind specified by the commission. If amendment 31 is approved, the two-year ban will be removed. The effect of that will be to impose, through subsections (5) and (6), a lifetime restriction on public sector employment for a former CAG. The commission originally recommended that a former CAG should not be eligible at all to take up other employment in the public sector after their term of office. It later recommended a five-year ban. As was said by the Father of the House, the legal advice cautioned there was a real risk that a permanent ban on public sector employment would be found indirectly discriminatory on age grounds.

The Government accept the importance of the CAG's independence, but we think that any restraints on future employment must be proportionate and within the law. A lifetime ban goes much further than what is required to protect the CAG's independence since it is hard to believe that a serving CAG could be influenced in any real sense while in office by a distant and, by its nature, highly uncertain prospect of remunerated work. Moreover, such a ban is likely to deter candidates, particularly younger ones, from applying for the post of CAG, which is not in anyone's interests.

As I have said, there is a real risk that a permanent ban on public sector employment would be found indirectly discriminatory on age grounds. Moreover, if such an infringement were found, it is unlikely that it could be defended as being reasonably necessary and objectively justifiable. A lifetime ban is therefore neither necessary nor desirable.

On amendments 29 and 30, the 15th report of the Public Accounts Commission recommended a lifetime ban on former CAGs accepting any post in any body that the National Audit Office has audited or which is in the gift of Government. It was in this context that the commission considered that some conflicts of interest could arise over posts in the private sector with, for example, defence contractors or other suppliers to the public sector. The commission therefore recommended that the CAG should consult what has been called the "Advisory Committee on Public Appointments". In fact, the correct title of the body is the Advisory Committee on Business Appointments.

Subsection (2) allows the Public Accounts Commission to nominate a person to advise former CAGs on taking up future offices or appointments. The advantage of the current drafting is that it allows the Public Accounts Commission to decide which person to consult depending on the circumstances at the time. It is therefore capable of adapting to future changes, for example should the name or responsibilities of the adviser change. That advantage should be obvious to Members already since, in attempting to be more specific, the amendment names a body that does not exist. There would, of course, be nothing to stop the commission specifying that the advice should be taken from the chair of the advisory committee if it so wished.

Turning briefly to Amendment 30, if subsection (3) were to be deleted, as proposed, not only would the Public Accounts Commission be unable to specify the adviser, but it would be unable to specify the description of offices, positions, agreements or arrangements. Therefore, a side effect of the amendment would be to create uncertainty about which positions are covered by subsection (2).

With that explanation, I hope David Howarth will consider withdrawing his amendment.

David Howarth (Cambridge, Liberal Democrat)

Yes, of course I will seek leave to withdraw amendment 29, and I thank the Government and the Father of the House for the explanation offered as to the change. It makes sense for this provision to be more flexible and to take into account the chance that the appropriate body to consult might change.

I shall not be pressing amendment 31 to a Division either, but the explanation that the Minister offered is slightly puzzling, in that the chances of this indirect discrimination happening and affecting anybody are remote. As I understand it, the argument put forward was that as a younger person would face a longer ban, in terms of years, than an older person, disproportionately more younger people, as opposed to older people, would be put off and that would therefore qualify as indirect discrimination on age grounds against the young. I suppose that is theoretically possible in some remote circumstance, but it does not strike me as the most obvious discrimination case that anyone would bring, especially when one considers the consequence of bringing such a case for one's career.

The reason for the two-year ban has not been entirely explained. The Minister mentioned the possibility of a five-year ban—I am not entirely clear about in what circumstances the commission suggested a five-year ban—but she did not offer any particular reasoning as to why the ban should be for two years, rather than for five. Given that the whole point of this clause is to maintain public confidence in the neutrality and independence of the CAG, if anything we should err on the side of caution.

Sarah McCarthy-Fry (Parliamentary Secretary, HM Treasury; Portsmouth North, Labour)

We obviously obtained the views of the commission and considered them carefully. We think that the two-year period achieves a sensible balance between the need to ensure the independence of the CAG and the desire to allow a former CAG to continue their career in the private or public sector, if they so wish. The two-year period is based on that for Ministers who wish to take up outside appointments.

David Howarth (Cambridge, Liberal Democrat)

That explains things, and I thank the Minister. Obviously the issue here is whether someone could be made such a big offer of such a big job and such a large salary that they might be tempted by it, even with a two-year delay. I recognise that that is somewhat unlikely, even in the public sector of today. With that, I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 42 ordered to stand part of the Bill.

Clause 43 ordered to stand part of the Bill.

Schedule 6 agreed to.

Clause 44 ordered to stand part of the Bill.

Schedule 7 agreed to.