Clause 4 - Studies at request of educational bodies
Public Audit (Wales) Bill [Lords]
10:00 am
Mr Bill Wiggin (Shadow Secretary of State for Wales, Local and Devolved Government Affairs; Leominster, Conservative)
I beg to move amendment No. 9, in page 5, line 12, leave out from 'Table' to end of line 14.
Mr Win Griffiths (Bridgend, Labour)
With this it will be convenient to discuss the following amendments:
No. 10, in clause 4, page 5, line 14, at end insert
'or if he considers it appropriate to do so'.
No. 12, in clause 4, page 5, line 42, at end insert—
'(aa) be appointed to audit their accounts;'.
No. 13, in clause 4, page 6, line 3, at end insert—
'(c) provided that any such member of staff is eligible for appointment within the terms of section 14'.
No. 11, in clause 4, page 6, leave out lines 12 and 13.
Mr Bill Wiggin (Shadow Secretary of State for Wales, Local and Devolved Government Affairs; Leominster, Conservative)
The amendments relate to value-for-money studies of educational bodies and the audit aspect of clause 4. We welcome value-for-money studies being carried out by the Auditor General in educational bodies, but they can be carried out only at the request of the educational body. That places
educational bodies in a position totally different from that of the bodies covered by clause 3, which the Auditor General can study at will. Why is there special treatment for educational institutions?
Amendments Nos. 9 and 10 would remove the need for consent. Amendment No. 10 offers an alternative to amendment No. 9 by adding at the end of line 14
''or if he considers it appropriate to do so.''
That would give the Auditor General back his power to initiate studies rather than rely solely on the consent of educational bodies. We do not believe that the initiative for studies should be left to the bodies themselves. Amendments Nos. 9 and 10 are probing amendments designed to ask the Minister to explain why these bodies are allowed to request value-for-money studies. They receive large amounts of public money, so it is important that the value for money of those funds is studied.
Amendment No. 11 is a probing amendment to discover whether the clause is drafted to be consistent with past legislation relating to educational bodies, and I hope that the Minister will explain subsection (7). If we simply allowed educational bodies to request to be studied, it would not be surprising if they did not choose to volunteer for scrutiny if there was any doubt whether all was well. The Auditor General's powers to study relevant bodies in clause 3 should apply to educational bodies. He should not have to depend on bodies requesting him to initiate studies. The Bill puts education authorities in a more protected position, so in that area the Bill fails to provide strong provision for public audit in Wales.
Amendments Nos. 12 and 13 concern the audit aspect of clause 4. In proposed section 145B(5), the Auditor General can advise higher and further education corporations on the appointment of auditors, or arrange for a member of his staff to be appointed auditor, but he himself cannot be appointed auditor. Amendment No. 12 would rectify that omission. Proposed new subsection (5) would allow the Auditor General to appoint a member of his staff as auditor to a higher or further education establishment. Amendment No. 13 merely seeks to ensure that the member of staff is qualified properly, in line with the qualification specified in clause 14.
We worry about the coherence of the Bill. Baroness Noakes described it in another place as
''a patchwork of different provisions culled from here, there and everywhere.''—[Official Report, House of Lords, 23 February 2004; Vol. 658, c. GC25.]
I hope that the Minister will take the opportunity to consider the amendments, which would ensure that the Bill did not prescribe different standards.
Mr Don Touhig (Parliamentary Under-Secretary (Wales), Department for Constitutional Affairs; Islwyn, Labour/Co-operative)
Amendments Nos. 9 and 10 would enable the Auditor General to undertake value-for-money studies of individual educational bodies in Wales, irrespective of whether they had been requested. You will recall, Mr. Griffiths, the case of a college in Gwent for which Members of Parliament played a significant role in getting an audit and investigation, and I have background knowledge of how such arrangements work in practice.
The intention of clause 4 is to enable the Auditor General to undertake studies of bodies, such as higher or further education colleges, at the request of the governing body or the funding agency. The relevant funding agencies in Wales are the National Council for Education and Training for Wales and the Higher Education Funding Council. The Audit Commission currently has the power in respect of England and Wales under the Audit Commission Act 1998.
It is appropriate that such studies should be undertaken only on request. The Auditor General is not the statutory auditor of such education bodies; they are responsible for the appointment of their own auditors—that is the distinction. However, the amendments would give the Auditor General complete discretion to undertake such studies, irrespective of whether they were requested, and of the fact that he would have no wider statutory audit functions in respect of those bodies.
The Auditor General already has the ability under section 145 of the Government of Wales Act 1998 to undertake economy, efficiency and effectiveness studies in the higher and further education sectors, which can touch on and compare the practices of individual institutions in using resources.
The National Council for Education and Training for Wales and the Higher Education Funding Council, to which I have referred, are Assembly-sponsored bodies, and the Auditor General for Wales is their statutory auditor. On publication of the draft Bill for consultation in April last year, the Assembly undertook that if at some point in the future it were to propose to incorporate further or higher education corporations as a category within the Auditor General's remit, such a proposal would be subject to a separate consultation exercise—an important safeguard. It would be preferable to deal with such bodies as a class rather than on a piecemeal basis.
Any future exercise could take account of arrangements for both financial audit and value-for-money audit through economy, efficiency and effectiveness studies. Nothing in proposed new section 145B(5) of the Government of Wales Act prevents the Auditor General and an education body from renewing an audit arrangement for a further financial year. It would be incongruous and would lead to confusion over the respective roles of the Auditor General and an educational institution's own auditor if the former could undertake unsolicited value-for-money studies.
Amendment No. 12 would enable the Auditor General to be appointed as the statutory auditor of an education corporation on a permanent basis. Clause 4 will add a new section 145B(5) to the Government of Wales Act to enable the Auditor General, at the request of a higher or further education corporation, both to advise them in connection with the appointment of persons to audit their accounts and to arrange for their accounts for a financial year to be audited by one or more members of his staff, appointed by the corporation.
If a corporation were experiencing difficulties, for whatever reason, in acquiring audit, they could call on the Auditor General for assistance. I have already referred to the National Assembly's undertaking to consult on any future proposal to incorporate further and higher education corporations as a class within the Auditor General's remit. Any such proposal would take account of both financial audit and value-for-money work.
Against that background, the amendment would create an unnecessarily piecemeal approach to the financial audit of higher and further education corporations and would run counter to the National Assembly's commitment to consult on any future proposed change to the audit arrangement for such bodies. In conjunction with section 144 of the Government of Wales Act, clause 63 would enable further and higher education institutions to be added to the Auditor General's remit at some point in the future.
Amendment No. 13 would require that any member of staff appointed to audit the accounts of an education corporation by the Auditor General must be eligible for appointment under clause 14. However, that clause relates specifically to the appointment of auditors by the Auditor General for local government bodies. Higher and further education corporations do not fall within the category of local government bodies—something that the Conservatives changed when they were in government.
The provision in clause 4(5) that would enable the Auditor General to arrange for one or more members of his staff to audit a corporation's accounts—subject to appointment by a corporation—is consistent with clause 9, which provides for any function of the Auditor General to be exercised by a member of his staff if authorised by him, without any further caveat. In practice, the Auditor General would satisfy himself that any member of his staff would be suitably qualified to undertake the work. Auditors would have an appropriate qualification awarded by one of the bodies within the consultative committee of accountancy bodies.
Amendment No. 11 would delete the reference to construing clause 4 as one with other education legislation. The provision is essentially one of clarification and is common to education legislation. It enables definitions in other education legislation to be relied upon to clarify meaning. For instance, if there were uncertainty about whether an educational establishment were a higher education institution for the purpose of value-for-money studies, under the provision in clause 4, the definition of such an institution in the Further and Higher Education Act 1992—and the way in which the courts have interpreted that Act—would be relied upon for clarification.
The hon. Gentleman referred in particular to amendments Nos. 9 and 10, and I want to touch on one or two points that he made. As I have said, if educational bodies in Wales are brought into the Auditor General's statutory audit responsibilities in future, clause 3 would apply to those bodies, and he
would be able to conduct a forward-looking value-for-money study of that body at his own discretion. The clause offers a degree of flexibility: it allows for future change, if the Assembly were to decide that change was necessary to allow the Auditor General to extend his remit within further and higher education. On that basis, although this has been a short debate, I invite the hon. Gentleman to withdraw his amendment.
Mr Bill Wiggin (Shadow Secretary of State for Wales, Local and Devolved Government Affairs; Leominster, Conservative)
I am grateful to the Minister for that reply. He was doing better before, but he is still on song. I do not feel quite as comfortable as I did earlier, although the points that he made after receiving a note do help somewhat. We have had a chance to air our worries, and that is about as constructive as we can hope to be, so I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 4 ordered to stand part of the Bill.