Mr Bill Wiggin (Shadow Secretary of State for Wales, Local and Devolved Government Affairs; Leominster, Conservative)

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

'Auditor General for Wales may carry out'.

Mr Win Griffiths (Bridgend, Labour)

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

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

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

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

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

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

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

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

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

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

Mr Bill Wiggin (Shadow Secretary of State for Wales, Local and Devolved Government Affairs; Leominster, Conservative)

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

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

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

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

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

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

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

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

Mr Don Touhig (Parliamentary Under-Secretary (Wales), Department for Constitutional Affairs; Islwyn, Labour/Co-operative)

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

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

Mr Bill Wiggin (Shadow Secretary of State for Wales, Local and Devolved Government Affairs; Leominster, Conservative)

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

Mr Don Touhig (Parliamentary Under-Secretary (Wales), Department for Constitutional Affairs; Islwyn, Labour/Co-operative)

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Mr Bill Wiggin (Shadow Secretary of State for Wales, Local and Devolved Government Affairs; Leominster, Conservative)

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

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

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

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

Amendment, by leave, withdrawn.

Clause 5 ordered to stand part of the Bill.

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