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

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

Mr Win Griffiths (Bridgend, Labour)

With this it will be convenient to discuss the following:

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

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

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

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

''exercising functions of a public nature''

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

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

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

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

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

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

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

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

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

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

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

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

Mr Hywel Williams (Spokesperson (Disability; Health; Social Security; Work and Pensions); Caernarfon, Plaid Cymru)

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

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

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

Amendment, by leave, withdrawn.

Clause 1 ordered to stand part of the Bill.