Clause 117
Local Government and Public Involvement in Health Bill
11:15 am

Tom Brake (Shadow Minister, Department for Communities and Local Government; Carshalton and Wallington, Liberal Democrat)

I seek clarification from the Under-Secretary on one point. I understood that the Audit Commission was concerned about whether, at the request of local authorities, it would be able to provide them with advice on an ad hoc basis. Is my understanding correct? Will the hon. Lady explain whether the Audit Commission will be able to deal with an ad hoc request made by a local authority?

Philip Dunne (Ludlow, Conservative)

It is my understanding that the Audit Commission receives 20 to 30 requests a year from local authorities to undertake investigations of various natures, from which it derives some income. I shall appreciate the Minister clarifying whether the ability of local authorities to request a review outside the normal annual review by the Audit Commission will continue if the clause is agreed to.

Angela Smith (Parliamentary Under-Secretary, Department for Communities and Local Government; Basildon, Labour)

I am grateful to hon. Gentlemen for their comments. I hope that I can do justice to them and address their concerns. The clause replaces section 37 of the Audit Commission Act 1998 with a wider power for the Audit Commission to provide advice or assistance. Section 37 enables the Audit Commission to provide assistance to certain named inspection bodies such as Ofsted and Her Majesty’s chief inspector of prisons, and to charge for such assistance. The clause also inserts in the 1998 Act new schedule 2A, as set out in schedule 11, which makes provision for the interaction of the Audit Commission with various persons and bodies in the exercise of its inspection and studies function. If we take into account clause 122, I can extend the debate and that may help in later discussions.

Clause 122 repeals sections 35 and 35A of the 1998 Act, which allow the commission to undertake fee-paid improvement studies of certain bodies at their request, or in some cases at the request of the Mayor of London. When we were considering such matters, we saw that there was a potential conflict of interest arising through the same body offering both improvement support  and inspection, in effect, operating as a critical friend and as an external regulator. Concerns have been expressed that this might lead some bodies to consider buying improvement services from the commission to obtain a better result at inspection. Commission inspectors could then be called on to judge impartially improvement work carried out by their colleagues.

There is also a value for money issue. The Government already fund the Improvement and Development Agency, the IDeA, to carry out improvement work and the commission—also a publicly funded body—should not be competing in the same market for fee-paid improvement work.

We took on board comments made on Second Reading. We are considering our policy regarding the Audit Commission’s powers to offer improvement advice. The comments made on Second Reading were quite scurrilous in some cases, referring to the opportunity to give money to private companies. That is not the case at all. I have outlined to the Committee the concerns that have been raised about the conflict of interest. We are reconsidering our policy and we want to discuss the issue further with the commission.

I hope that this has helped the hon. Gentlemen. The matter is being discussed and it is being looked at. I hope that satisfies the Committee.

Robert Syms (Shadow Minister (Local Government), Communities and Local Government; Poole, Conservative)

With the transfer of the benefit fraud inspectorate into the Audit Commission, will the commission, at the request of the Benefits Agency, be able to give advice on whether they can save money and how better to run their organisation? Is that still a two-way street?

Angela Smith (Parliamentary Under-Secretary, Department for Communities and Local Government; Basildon, Labour)

Yes, it is.