Orders of the Day — Public Audit (Wales) Bill [Lords]

– in the House of Commons at 1:22 pm on 17th June 2004.

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[Relevant documents: The Fifth Report from the Welsh Affairs Committee, Session 2002–03, on the draft Public Audit (Wales) Bill, HC 763, and the Government's response thereto, HC 87, Session 2003–04.]

Order for Second Reading read.

Photo of Don Touhig Don Touhig Parliamentary Under-Secretary (Wales), Department for Constitutional Affairs, The Parliamentary Under-Secretary of State for Wales, Parliamentary Under-Secretary (Department for Constitutional Affairs) (also in Wales Office) 1:24 pm, 17th June 2004

I beg to move, That the Bill be now read a Second time.

The Public Audit (Wales) Bill is intended to create a unitary public audit framework for Wales, with overall responsibility for public audit vested in one person—the Auditor General for Wales. The Bill will extend the Auditor General's powers to include most, although not all, of the current functions of the Audit Commission in Wales. Together, the Auditor General and his staff will be known as the Wales Audit Office or Swyddfa Archwilio Cymru. It builds on the creation, under the Government of Wales Act 1998, of the Office of the Auditor General for Wales and the National Assembly's Audit Committee to scrutinise the National Assembly's expenditure and the value for money obtained from it.

Photo of Mr Llew Smith Mr Llew Smith Labour, Blaenau Gwent

The Minister says that the new audit office will have the ability to scrutinise the funding of the National Assembly for Wales. Will it be able to look, for example, into the commitment made at the time of the referendum? We were told, as he well knows, that if we voted for the National Assembly, we would have a bonfire of the quangos. We were promised not only such a bonfire, but that the savings that would come from it—we were told that they would be £20 million—would be more than enough to run the National Assembly for Wales. We now know that the National Assembly costs an additional £100 million or so a year to run, so would it be possible for the new audit office to consider the original claim and, indeed, the funding since then of that institution?

Photo of Don Touhig Don Touhig Parliamentary Under-Secretary (Wales), Department for Constitutional Affairs, The Parliamentary Under-Secretary of State for Wales, Parliamentary Under-Secretary (Department for Constitutional Affairs) (also in Wales Office)

Of course, it will be a matter for the Auditor General to decide what he and his staff will examine. As for the point that my hon. Friend makes about a bonfire of the quangos, I am not sure whether there has been one, but there have certainly been a few sparks.

Devolution has resulted in a far greater degree of scrutiny and accountability in respect of public spending in Wales, and the Bill will advance that cause further. Under the Bill, the Auditor General will retain responsibility for financial and value-for-money auditing of the Assembly, its bodies and its funds. The Bill will extend the Auditor General's remit, so that he or she will have sole responsibility for the financial audit and value-for-money studies of NHS bodies in Wales. He or she will appoint auditors to local government bodies in Wales and take on inspection functions under the Wales programme for improvement, best value review under the Local Government Act 1999.

Photo of Greg Knight Greg Knight Shadow Minister (Environment, Food and Rural Affairs)

Does the Minister not think that there is a case for the Public Accounts Committee also to have the power to scrutinise the Welsh Assembly's spending decisions?

Photo of Don Touhig Don Touhig Parliamentary Under-Secretary (Wales), Department for Constitutional Affairs, The Parliamentary Under-Secretary of State for Wales, Parliamentary Under-Secretary (Department for Constitutional Affairs) (also in Wales Office)

Of course, the Public Accounts Committee can broadly examine such matters because the House votes the budget for the Welsh Assembly to the Secretary of State for Wales, who then hands it to the Welsh Assembly. That is a matter for the PAC, but the right hon. Gentleman will accept that the Assembly has its own very effective Audit Committee.

Photo of Alan Williams Alan Williams Labour, Swansea West

In fact, the Public Accounts Committee, as my hon. Friend knows, only investigates reports from the National Audit Office, under Sir John Bourn, in so far as they affect England. Sir John Bourn, with a different hat on, reports directly to Wales. So we in the PAC have no locus to hear matters that relate specifically to Wales.

Photo of Mr Llew Smith Mr Llew Smith Labour, Blaenau Gwent

In referring to the commitment to have a bonfire of the quangos, the Minister admitted that there had been not a bonfire, but a few sparks. Will he accept that we have not had even a few sparks, only a damp squib? There are now more quangos in Wales than when the commitment was made. Indeed, quangos in Wales are far more powerful now than they were then.

Photo of Don Touhig Don Touhig Parliamentary Under-Secretary (Wales), Department for Constitutional Affairs, The Parliamentary Under-Secretary of State for Wales, Parliamentary Under-Secretary (Department for Constitutional Affairs) (also in Wales Office)

I think that I will stick by my original comments and say that there have been a few sparks.

Hon. Members will be aware that the Bill has been the subject of pre-legislative scrutiny and public consultation. It was introduced in another place last November and closely examined there, and the process has undoubtedly improved it. I especially pay tribute to representatives of the Conservative party and the Liberal Democrats because their contributions to the process and the discussions that I had with them helped to inform our judgments on how to amend and improve the Bill. That represents Parliament working at its best.

The Bill's objectives have been almost universally welcomed by all who took part in the early scrutiny. The Assembly in Cardiff, the Auditor General for Wales, the Audit Commission in Wales and the Welsh Local Government Association have welcomed it. The Welsh Local Government Association is satisfied that the Bill's proposals will not impinge on its constitutional independence and democratic accountability. Indeed, several of the Bill's provisions are designed to safeguard the independence of local government. Foremost among them is this safeguard: although the Auditor General will take on responsibility for the appointment of auditors to local government bodies, he or she will not be able to appoint him or herself in a personal capacity to be that auditor.

Photo of Ian Liddell-Grainger Ian Liddell-Grainger Conservative, Bridgwater

Clause 5 will insert new section 145C "Studies relating to registered social landlords" into the Government of Wales Act 1998. Will the Auditor General be able to appoint auditors to examine social landlords in isolation? I ask because the new section contains nine subsections, but does not make it clear where the responsibility for such appointments lies.

Photo of Don Touhig Don Touhig Parliamentary Under-Secretary (Wales), Department for Constitutional Affairs, The Parliamentary Under-Secretary of State for Wales, Parliamentary Under-Secretary (Department for Constitutional Affairs) (also in Wales Office)

Yes, the Auditor General will be able to do that, which will be welcomed as beneficial.

Key benefits will flow from the Bill. It will result in a single audit body where there are now two, which will enable expertise and best practice from differing areas of audit work to be developed and shared more easily. It will make public audit arrangements in Wales simpler and more understandable. For example, two different bodies currently have responsibility for various aspects of the financial audit of the health service and both have responsibility for value-for-money studies. I think that everyone would agree that that is confusing and over-complex. Under the Bill, the Auditor General will have sole responsibility for the financial and value-for-money audit of NHS bodies in Wales. The Bill also tries to encourage collaboration and mutual assistance between the Auditor General and a wide range of relevant bodies, such as Audit Scotland and the Comptroller and Auditor General for Northern Ireland.

We have tried to find the most logical and cost-effective approach on cross-border work between England and Wales. I can confirm that the Audit Commission will retain its existing functions under the Audit Commission Act 1998 to undertake local government cross-border reviews and other studies on an England and Wales basis. Similarly, the Health and Social Care (Community Health and Standards) Act 2003 empowers the newly created Commission for Healthcare Audit and Inspection to undertake equivalent cross-border reviews in respect of NHS bodies.

Photo of Mr Gareth Thomas Mr Gareth Thomas PPS (Rt Hon Paul Murphy, Secretary of State), Northern Ireland Office

Does my hon. Friend agree that cross-border comparisons are absolutely essential if we are to guarantee that there is a broad-ranging approach on ensuring that we have value for money between England and Wales?

Photo of Don Touhig Don Touhig Parliamentary Under-Secretary (Wales), Department for Constitutional Affairs, The Parliamentary Under-Secretary of State for Wales, Parliamentary Under-Secretary (Department for Constitutional Affairs) (also in Wales Office)

I do, because I remember from my previous incarnation as a councillor in Gwent in south-east Wales that cross-border comparisons help to drive up standards. We learned a great deal from such studies.

The Bill will facilitate cross-border working by agreement and the Government are confident that co-operation will be widely embraced. It includes provisions that require the Auditor General, the Audit Commission, the Assembly and CHAI to co-operate and consult each other when necessary for the proper exercise of their respective functions. Mr. Wiggin will recall from our debates on the Wales (Health) Bill that several Conservatives Members were especially keen to ensure that there were would be no duplication of effort through cross-border co-operation. The Bill requires the Audit Commission and CHAI to have regard to work done by the Auditor General when undertaking cross-border work.

The Government amended the Bill in another place to impose mutual duties on certain key bodies to provide each other with any information that they may reasonably require for cross-border comparative purposes. Those bodies are the Auditor General and the Audit Commission, and the Auditor General and CHAI. All the essentials are in place for effective and productive cross-border collaboration without imposing over-rigid requirements.

Since the draft Bill was first published in April 2003, it has been scrutinised by the Select Committee on Welsh Affairs, the report and recommendations of which were debated by the Welsh Grand Committee in July 2003. A Committee of the Assembly also scrutinised the draft Bill in the early summer of 2003 and the full Assembly debated its report. More than 200 organisations were involved in a 12-week public consultation, and 41 recommendations for change or clarification were made in all, of which 19 were accepted. In addition, improvements were made to the Bill as a result of amendments made during its passage through another place. I have already mentioned the amendments made on the mutual duty of the key audit and inspection bodies to provide each other with information for cross-border comparative studies, and I also want to touch on other key improvements to the Bill.

The draft Bill was designed to give the Auditor General enhanced rights of access to documents and information on bodies for which he has statutory audit responsibility, and those enhanced rights reflected the recommendations of Lord Sharman's report. Clauses 11, 18 and 52 of the Bill will ensure that auditors should be able to follow the trail of public money to end users. My hon. Friend Llew Smith will remember when we were involved in pressing for an inquiry on a college in our part of the world, so I am sure that we will all welcome the improvement to the system.

The Welsh Affairs Committee recommended that the Bill should provide consistent access rights across both local government and non-local government sectors in Wales, and the draft Bill was amended to achieve that. However, the Bill now goes one step further. It has been amended to enable the Auditor General and appointed auditors of local government bodies to require assistance and information from effectively any person whom they consider could help in exercising these functions, irrespective of whether that person held or was responsible for relevant documents. That means that a person will no longer be able to refuse to give an auditor assistance solely on the basis that he or she had lost a document or was no longer in possession of it.

Hon. Members will be well aware that the most contentious of the Bill's provisions is clause 54. It will restrict the disclosure of information obtained during the course of a local government audit or study by an auditor or the Auditor General, albeit with widely cast exceptions. The clause is equivalent to section 49 of the Audit Commission Act 1998. Both pieces of legislation impose a criminal sanction on a person who discloses information in contravention of those provisions. Both the Welsh Affairs Committee and the Welsh Assembly recommended that the clause should be deleted from the draft Bill, as did the Auditor General. However, the Audit Commission and the Welsh Local Government Association argued for it to be retained because it would provide a safeguard against the inappropriate or premature release of information—I stress the importance of the word "premature".

The Government fully understand that there should be no impediment to the legitimate disclosure of information, and the Freedom of Information Act 2000 is a testament to that. In this particular case, however, they also consider that there should not be undue inconsistency in the criminal law between England and Wales on the appropriate release of information. That would be the case if clause 54 were deleted while section 49 of the Audit Commission Act 1998 remained in force.

Owing to those concerns, the Government amended clause 54 in another place to enable the Bill to be further amended after its enactment to reflect the outcome of a general review that is being undertaken by the Department for Constitutional Affairs under the Freedom of Information Act on existing statutory bars to the disclosure of information. The Government have announced their intention to amend section 49 of the Audit Commission Act as a result of the review, and I made a ministerial statement to that effect, which was laid before both Houses of Parliament on 24 March. The amendment will overturn the existing presumption in section 49 against disclosure, and change it to one in favour of disclosure, which is wholly consistent with the spirit of the Freedom of Information Act 2000.

Photo of Lembit Öpik Lembit Öpik Shadow Secretary of State for Northern Ireland, Northern Ireland Affairs, Shadow Secretary of State for Wales, Welsh Affairs

While welcoming the change and the fact that the Government have listened to people's concerns, I should be grateful if the Minister would outline the time scale. Lord Evans said in another place that he expected change to be completed

"as soon as possible and certainly before the end of this year."—[Hansard, House of Lords, 11 May 2004; Vol. 661, c. 168.]

Will the Minister assure us that the matter will be entirely resolved by the end of the year?

Photo of Don Touhig Don Touhig Parliamentary Under-Secretary (Wales), Department for Constitutional Affairs, The Parliamentary Under-Secretary of State for Wales, Parliamentary Under-Secretary (Department for Constitutional Affairs) (also in Wales Office)

I am grateful to the hon. Gentleman, and was about to come on to that point. It is the Government's intention to make an order before the end of the year to amend section 49. We have to amend clause 54 separately, and that amendment will be made by the end of the year to bring it into line with section 49.

Photo of Ian Liddell-Grainger Ian Liddell-Grainger Conservative, Bridgwater

Clause 54(2)(h) talks about the disclosure of information

"for the purposes of any criminal proceedings which have been or may be initiated".

If such information is disclosed retrospectively, who would be responsible? Would it be the Audit Commission in Wales or the Audit Commission? If there is a UK-wide investigation before the Bill is enacted which body would be responsible?

Photo of Don Touhig Don Touhig Parliamentary Under-Secretary (Wales), Department for Constitutional Affairs, The Parliamentary Under-Secretary of State for Wales, Parliamentary Under-Secretary (Department for Constitutional Affairs) (also in Wales Office)

I believe that it would be the Audit Commission, although it may be the Auditor General for Wales. I will clarify the position for the hon. Gentleman before the winding-up speeches

Clause 22 deals with immediate and other reports in the public interest. Subsection (1) states:

"In auditing accounts of a body under this Chapter, an auditor must consider whether, in the public interest, he should make a report on any matter which comes to his notice in the course of the audit, in order for it to be . . . considered by the body, or . . . brought to the attention of the public."

Subsection (3) makes the position clear. It states:

"If the auditor considers that the public interest requires the matter to be made the subject of an immediate report, he must make the report immediately."

I hope that that assuages the concerns of right hon. and hon. Members. The Government are determined that there should be no unreasonable impediments to the proper disclosure of information in the Bill.

Photo of Ian Liddell-Grainger Ian Liddell-Grainger Conservative, Bridgwater

Are subsections (1) and (3) of clause 22 covered by the Human Rights Act 1998? If one asked for retrospective information about an audit, disclosure of such information in the public interest could breach someone's human rights.

Photo of Don Touhig Don Touhig Parliamentary Under-Secretary (Wales), Department for Constitutional Affairs, The Parliamentary Under-Secretary of State for Wales, Parliamentary Under-Secretary (Department for Constitutional Affairs) (also in Wales Office)

I do not believe that that would be the case but, again, I will provide clarification later for the hon. Gentleman on that important point. We are establishing a series of measures so that there is a presumption in favour of disclosure, and I believe that Members on both sides of the House will welcome that.

The role of the public expenditure watchdog is vital in maintaining and improving accountability and safeguarding the public interest. Almost £12 billion of taxpayers' money is spent on functions devolved to the National Assembly, which ensures that it is spent correctly and with due regard to value for money in public services. Although financial audit remains a key component of an auditor's work, the role of auditing has developed over recent years. It increasingly includes advice and assessment of clients' corporate governance arrangements, including the assessment of risk management. Advice on increasingly sophisticated financial management systems is another important aspect of auditing. Inside an organisation, people would say that the watchdog is a man's best friend. A value-for-money audit provides reassurance to the public, and is strategically important for developing policy and improving performance.

The mechanisms for public expenditure and accountability are becoming more complex. The Assembly is working with the Government to develop a distinctive partnership approach, which involves a range of public, voluntary and private sector bodies in the development of policy and the delivery of objectives. Good examples include the communities first initiative and the Wales waste strategy, but all the initiatives involve close collaboration and co-operation across sectors. The value-for-money functions of the Auditor General for Wales are retrospective, and cover the way in which a body has used its resources in the past. The Bill will enable him to undertake forward-looking value-for-money studies across the sectors, covering the full range of public bodies in Wales. Those studies can inform policy decisions and will provide reassurance to taxpayers that their money is being well spent.

In conclusion, the Bill offers a single framework for public audit in Wales, with expertise vested in a single organisation, which suits both the way in which the Government work in Wales and the interests of the people of Wales, who pay for the services that they receive from the public sector. It will concentrate expertise and help to develop and spread innovation and best audit practice across the public sector in Wales. It will also enable the Wales Audit Office to play a full part in developing wider audit standards in co-operation with other bodies throughout the United Kingdom. It provides the basis for a world-class audit body of which Wales can be proud, and gives the Auditor General the tools that he needs to meet the challenges of rapid change and an increasingly complex public finance framework. I commend the Bill to the House.

Photo of Bill Wiggin Bill Wiggin Shadow Secretary of State for Wales 1:46 pm, 17th June 2004

I am grateful to the Minister for his kind words, and to Mr. Jones, the Chairman of the Welsh Affairs Committee, under whom I served when the Bill was scrutinised. I pay tribute to the Committee's hard work, and particularly to him.

Regrettably, the programme motion proposes a deadline of 1 July for Committee proceedings. Such a timetable will create difficulties, given the complexities of clause 54 that the Minister has just told us about. The Bill will consolidate audit arrangements for public bodies in Wales, replacing the Auditor General in Wales and the Audit Commission in Wales with a national audit office that will ensure best value from the National Assembly, health bodies, NHS trusts and local government bodies. In principle, we welcome the consolidation of a single audit regime in Wales, which makes good sense. The new office has great potential to improve the quality of public services and government in Wales, and ensure the best-value use of resources. We owe a debt of gratitude to Baroness Noakes and Lord Roberts of Conwy, who greatly improved the Bill in the other place. Most of the 23 Government amendments made in the House of Lords were introduced after discussion of Conservative amendments, so I am grateful to my colleagues in another place.

There are, however, still inconsistencies in the Bill about which we are concerned. The Government have insisted on making the Bill consistent with audit arrangements in England simply by regurgitating arrangements that currently exist in England and Wales. Consequently, a great opportunity for improving the audit regime in Wales has been missed. Clauses 5 and 11 are consistent with provisions in England, but create arrangements that are inconsistent in Wales.

We are concerned that the criminal sanctions in clause 5 will affect registered social landlords' rights of access, as the clause makes it a criminal offence for registered social landlords to hinder the work of the Auditor General for Wales. However, criminal sanctions are omitted from clause 11, which deals with the Auditor General's right of access to general information. We will therefore make the Bill consistent by tabling amendments that either remove the criminal sanctions from clause 5 or create criminal penalties for a breach of access rights in clause 11. Clauses 18, 53 and 5 do not deal with criminal sanctions, but are inconsistent with one another, so we will table amendments to deal with that.

In an attempt to justify those inconsistencies, the Minister said that the Bill is consistent with audit provisions in England. The Government have ignored the chance to create a coherent, logical audit regime in Wales, and one such inconsistency is to be found in clause 14. The Auditor General cannot appoint himself as the auditor to local authorities, yet he can audit NHS bodies himself. As Baroness Noakes pointed out, why would such an appointment cause a conflict of interest in local government bodies but not health trusts? It is puzzling that there should be constraints on the Auditor General in the local government sphere while he has freedom to act directly in the health field.

The most contentious issue is clause 54, which restricts the disclosure of information held by the Auditor General in respect of local government unless consent is given for its disclosure by the body or the person to whom the information relates.

Photo of Ian Liddell-Grainger Ian Liddell-Grainger Conservative, Bridgwater

My hon. Friend is making a powerful case. Does he agree that if the Auditor General found an anomaly in relation an NHS trust or social housing, the Audit Commission would have to audit the Auditor General to check that his figures were right, so that in the Audit Commission role he could take action on the Auditor?

Photo of Bill Wiggin Bill Wiggin Shadow Secretary of State for Wales

I am grateful to my hon. Friend for that intervention. He makes an important point and I look forward to hearing his contribution in Committee, which I am sure will be valuable. The difficulty with this part of the Bill is that the Auditor General is not allowed to appoint himself. If he is allowed to appoint himself to audit NHS trusts, surely he should be able to appoint himself to audit local government expenditure. My hon. Friend sensibly points out that we need consistency; otherwise the purpose of the Bill is diminished. The Bill is a good one, by and large, and it will improve matters, but not as much as I would have liked.

Photo of Andrew Robathan Andrew Robathan Conservative, Blaby

While my hon. Friend is on inconsistency and disclosure of information, can he say whether, in his judgment, the failure to disclose information could be in conflict with the Freedom of Information Act 2000, about which we heard from the Minister?

Photo of Bill Wiggin Bill Wiggin Shadow Secretary of State for Wales

I shall have more to say about clause 54, but there is indeed a problem. The Government Whip seemed surprised by my opening comments about the timetabling, and I shall try to explain why I am bothered. The Government's amendments to clause 54 through amendment of section 49 of the Audit Commission Act 1998, under the Freedom of Information Act 2000, will not take place until after the Bill is on the statute book. We are therefore being asked to legislate on trust. Surely it is the job of Parliament to ensure that we legislate as well as we can, rather than by remote control or trust in the Government. That is why the Committee stage should take place after the Government have tabled their amendments to the other legislation.

Photo of Lembit Öpik Lembit Öpik Shadow Secretary of State for Northern Ireland, Northern Ireland Affairs, Shadow Secretary of State for Wales, Welsh Affairs

Although I understand the hon. Gentleman's suspicion about taking the Minister's assurance on trust, does he accept that given the explicit statements made in another place and by the Minister today committing the Government to introducing the appropriate amendments before the end of 2004, the Government are unlikely to have much room for manoeuvre or delay?

Photo of Bill Wiggin Bill Wiggin Shadow Secretary of State for Wales

I am tempted to remind the hon. Gentleman that the Secretary of State just told us that everybody lost the European elections. When one came first in those elections, it is difficult to believe the Government all the time.

Photo of Andrew Robathan Andrew Robathan Conservative, Blaby

I do not wish in any way to impugn the Minister, who is a decent soul, but until about two months ago we were told categorically that there would not be a referendum on a European Union constitution. Now we are told that there will be a referendum. Does that not reinforce my hon. Friend's point that we should not take assurances on trust?

Photo of Bill Wiggin Bill Wiggin Shadow Secretary of State for Wales

I agree. The problem in the present case is that there is no option. We shall deal with that in Committee. The Bill is a good piece of legislation and the Government are trying to do their best, but the problem—I address this to Lembit Öpik as well—is that even though the Government have promised to make changes, we still have not seen a draft or detail of those changes.

Photo of Alan Williams Alan Williams Labour, Swansea West

The House will have the opportunity to discuss the Government amendments when they are tabled, and that is when we will make the decision. Since we are giving a subordinate power, which could not be used to introduce changes in Wales as it is contingent on what happens in England, the Bill is utterly logical.

Photo of Bill Wiggin Bill Wiggin Shadow Secretary of State for Wales

I do not agree. The right hon. Gentleman implies that whatever is later debated will be perfectly adequate for Wales. That is fundamentally at odds with the Select Committee report. Everyone who has criticised the clause is deeply unhappy about it. I do not agree with the right hon. Gentleman, but I accept that he is doing his best by intervening.

If I can make some progress, perhaps I can shed some light on why I am concerned about clause 54. It restricts disclosure of information held by the Auditor General in respect of local government unless consent is given by the relevant body. The Government have conceded that the clause is not satisfactory, but their amendment does not go far enough to protect against those who mishandle their duties to public bodies. It blocks the proper presentation of findings in the public domain that would embarrass those involved.

The Government amendment would allow but not require the Secretary of State to amend clause 54, but only if section 49 of the Audit Commission Act 1998 is amended under the Freedom of Information Act 2000. However, the Government have not proposed to change section 49, except in what we heard today, so I have reservations about the possible use of clause 54 against whistleblowers. Anyone who doubts that should consider what happened to James Cameron. I was extremely disturbed to read about that.

Those who support a free society will also have concerns about clause 54, as it would deter potential whistleblowers, who would be treated far more harshly in local government audit than in any other public sector audit environment. That is one of the inconsistencies that concern us. We believe it is wrong in principle to apply criminal sanctions to the disclosure of audit information. That was the conclusion of the Welsh Affairs Committee too, and of the Assembly Committee that considered the draft Bill. The Auditor General has made it clear that he did not request those provisions. It is the Government who wish to undermine the accountability and responsibility of public bodies for their actions.

Under what circumstances do the Government consider that criminal sanctions would be appropriate for the disclosure of information? In his opening comments the Minister suggested that criminal sanctions would be appropriate if someone released information a little earlier than they should, but I do not believe that James Cameron would ever have found it too late to deliver the information that he did.

Photo of Don Touhig Don Touhig Parliamentary Under-Secretary (Wales), Department for Constitutional Affairs, The Parliamentary Under-Secretary of State for Wales, Parliamentary Under-Secretary (Department for Constitutional Affairs) (also in Wales Office)

I shall try to be helpful. The Government take the view, as I said, that there should be no inconsistency in criminal justice between England and Wales. That is why we thought clause 54 should be retained. Following discussions in the other place and with colleagues, we amended the clause in the other House, as the hon. Gentleman understands. As a Member of Parliament in the 1992–97 Parliament, I introduced a Bill to protect whistleblowers. Mr. Robathan was very helpful in the debate—we may have converted him in the course of it—and he made an important contribution to that debate. I may have been sitting on the Opposition Benches as he is now, but that is the will of fate.

Clause 54(2) lists a number of exceptions to the restriction on disclosing information. Those exceptions explicitly allow disclosure on matters relating to best value, fraud, the work of the ombudsman, the discharge of social service functions, education best-value matters, matters affecting social landlords and matters of a criminal nature. So on a raft of matters set out in subsection (2), disclosure is allowed as the clause stands.

Photo of Bill Wiggin Bill Wiggin Shadow Secretary of State for Wales

I am grateful to the Minister, and I am keen to emphasise that at no stage did I think that he was one of those on the darker side of this business who would suppress whistleblowers. Nevertheless, we must be careful. One can only imagine the fear and trepidation felt by someone before they blow the whistle.

Photo of Mark Tami Mark Tami Labour, Alyn and Deeside

If the hon. Gentleman does not consider criminal sanctions suitable, what sanctions would be suitable?

Photo of Bill Wiggin Bill Wiggin Shadow Secretary of State for Wales

If whistleblowers are to be allowed to tell the truth, criminal sanctions may not be the best way to deal with them. We are talking about people releasing information, not stealing or committing acts that are traditionally known as crimes. They could be fined or dealt with in other ways, but the clause allows imprisonment. Even fining may be too harsh. I am concerned not so much about the scale of the punishment as about the whole principle of how we legislate and the manner in which the Government are promising to change the Bill after it is on the statute book. I hope that that answers the hon. Gentleman's question.

On Third Reading in the other place, Lord Evans of Temple Guiting announced that the Office of the Deputy Prime Minister had instructed the Department for Constitutional Affairs to incorporate an amendment to section 49 of the Audit Commission Act and to amend clause 54 accordingly, although that will not happen until the end of this year. Clause 54 represents another example of the Bill following English precedent instead of taking the opportunity to create something new for Wales. As the Welsh Affairs Committee said, it is a shame that the Bill is not better for Wales instead of no worse than for England.

As it stands, the Bill represents many wasted opportunities. I fear that the changes that it introduces have not been properly costed. The Government have admitted to an inaccurate estimate of start-up costs, with the most recent regulatory impact assessment raising the initial cost from £500,000 to £987,000. However, that does not account for additional budgetary costs, even though there will be no scale economies in establishing the Wales Audit Office. It would be helpful if the Minister informed the House of the current running costs, and I hope that he will do so when he winds up.

Although the Bill will make a difference, it is rather disappointing that it is the only piece of Wales-specific legislation, despite the National Assembly for Wales having proposed five Bills. We know that Lord Morris of Aberavon was disappointed when, much to the Minister's embarrassment, he said on Second Reading in the other place:

"I know the pressures on the Government's business managers . . . and"

I have

"seen many Ministers' worthy legislative proposals thrown aside for lack of time. But that is the purpose of the Secretary of State for Wales—to fight for Wales in Cabinet; he has hardly any other real functions."

He must have forgotten that the Secretary of State has another job, as of course we could not forget, as he answered questions this morning. He continued:

"By any standards, this is pretty poor reward for his efforts."—[Hansard, House of Lords, 9 December 2003; Vol. 655, c. 717.]

Overall, we welcome the Second Reading of the Bill, which will create a single audit body in Wales to the benefit of the people of Wales. The Bill has been greatly improved by the hard work of Conservatives, but inconsistencies and concerns remain. I do not wish at any stage to forget the input of the Welsh Affairs Committee.

The challenge in Committee will be to amend clause 54 so that the Government can ensure that it satisfies modern tests of transparency. I know that they and the Minister want to deliver that result, but I am still not happy that they have completely succeeded.

How can we possibly pass the Bill until section 49 of the Audit Commission Act has been amended? I cannot believe that the Government would want it any other way, given that they propose to uphold the accountability of public bodies and to protect those who blow the whistle on corruption.

We will strive in Committee to resolve the inconsistencies in the criminal sanction provisions with regard to rights of access to information. There is an underlying concern that the Bill simply imports the current audit regime for England and Wales, thereby ignoring the chance to make the audit regime in Wales sharper and more suitable than the English version. Instead of making Wales the beacon of good audit practice, the Government have chosen to duplicate the Audit Commission Act. That is short-sighted. We shall endeavour to improve the Bill further in Committee.

Photo of Martyn Jones Martyn Jones Labour, Clwyd South 2:03 pm, 17th June 2004

Following last year's effective consultation and pre-legislative scrutiny of the Bill by the Select Committee on Welsh Affairs, of which I am Chairman, the Welsh Grand Committee and Committees of the Welsh Assembly, several changes have been made, and it has been improved still further during its passage through the Lords. I should like to single out the following matters for the House's attention.

Photo of Julie Morgan Julie Morgan Labour, Cardiff North

As my hon. Friend says, the Bill has received an enormous amount of scrutiny, during which the Welsh Affairs Committee and the Committee in the Assembly interviewed the same people. Next week those two Committees will start a joint investigation—an historic event. Does he agree that that is partly a result of our experience on this Bill?

Photo of Martyn Jones Martyn Jones Labour, Clwyd South

I am grateful to my hon. Friend. I was going to mention that later, but she has pre-empted me.

The Welsh Affairs Committee welcomed the extension of the Auditor General for Wales's access rights to follow public money to end recipients such as contractors and grant recipients—that was in clause 11 at the time—and recommended that those extended rights should also apply to local government-appointed auditors. That was accepted, and what is now clause 18 was amended before the Bill was introduced. That is an example of how pre-legislative scrutiny is helpful. Following debate in the Lords, the Government extended those rights even further to require assistance from anyone who might have relevant information, as well as the production of documents. That is a good outcome. Public auditors in Wales will now have access rights among the best in the civilised world and fully in line with Lord Sharman's recommendations.

The draft Bill allowed the Audit Commission to continue to have access rights to Welsh local authorities for the purposes of producing cross-border reports on performance. We should remember that the Auditor General for Wales was not being given similar access to English local authorities. The Welsh Affairs Committee recommended that the Auditor General for Wales and the Audit Commission should co-operate on cross-border work and produce reports that were jointly badged so that both organisations could take their share of the credit.

Photo of Ian Liddell-Grainger Ian Liddell-Grainger Conservative, Bridgwater

The hon. Gentleman is making some interesting points. He hits the nail on the head in relation to access to documents by the Auditor General, which is covered by clause 11(3), but how does he see that unfolding in relation to, for example, cross-border investigations of subsidiary companies? There are cost implications, legal implications and, perhaps, European implications, but none of that is dealt with in the Bill.

Photo of Martyn Jones Martyn Jones Labour, Clwyd South

I agree that, on the face of it, that is not in the Bill. However, the Government's proposals go some way towards meeting the concerns expressed in the Welsh Affairs Committee as regards such situations.

The Government did not accept the Committee's view, but they amended the Bill to require the Audit Commission to take account of the work of the Auditor General for Wales and to co-operate with him—or her, as may be the case in future. Following pressure in the House of Lords, the Government tabled new clauses requiring the Audit Commission, the Auditor General for Wales and the Commission for Healthcare Audit and Inspection to share relevant information. Although we are not entirely happy with that, it is a good halfway-house solution. I hope that the Government will consider that further.

Clause 54—formerly clause 50—prevents information obtained in the course of an audit from being disclosed except in certain circumstances. Our Committee backed suggestions that it should be deleted and replaced with agreed protocols about the clearance of draft reports. The Government did not accept that because they believed the clause to be identical to section 49 of the Audit Commission Act 1998, which will continue to apply in England. As that section contains offence provisions, the Government took the view, as the Minister confirmed again today, that it would be unacceptable to have aspects of criminal law that applied in England but not in Wales.

Following pressure by the Lords, the Government issued a ministerial statement saying that section 49 was under review as part of the review of statutory bars following the passing of the Freedom of Information Act 2000. They further stated that it is likely to be amended to create a presumption in favour of disclosure rather than against it, as at present. Clause 54 now contains an order-making power to allow the Secretary of State to amend it in line with any changes made to section 49 of the 1998 Act. I understand that, as the Minister repeated today, that will happen within the year. However, I still believe, as do my Committee, that Wales is being required to hang on to England's coat tails. That is a cause for concern.

More generally, part 2, which covers local government audit, replicates the Audit Commission Act 1998 in large measure, with the Auditor General for Wales being put into the commission's shoes. The Bill has its origin in a local government Act of the 1970s, the name of which escapes me, and could do with being brought into the 21st century. However, the Government do not wish to create different rules for local government in England and in Wales—that is a reasonable proposition—especially as such bodies are accountable to their electorates, not the Welsh Assembly.

Part 2 also contains offence provisions unlike the audit arrangements for the Assembly and its related public bodies. That contrasts with the audit of NHS bodies, which are accountable to the Assembly, and part 3 greatly simplifies the audit regime to suit Welsh circumstances.

Overall, the Bill is a good measure, which will create a Wales Audit Office. That is appropriate for the devolved environment in which we now have to work in Wales.

Photo of Lembit Öpik Lembit Öpik Shadow Secretary of State for Northern Ireland, Northern Ireland Affairs, Shadow Secretary of State for Wales, Welsh Affairs 2:10 pm, 17th June 2004

Good auditing tends to be invisible in that, when it is done correctly, the general public get the benefit but do not necessarily observe the process. In my time as a Member of Parliament, not one member of the public has lobbied me for the Bill. I can see that the Minister is barely able to contain his shock at that discovery but it is true. Nevertheless, a responsible Parliament must take the matter seriously.

The complex and sophisticated nature of modern auditing means that it is in order for us to try to ensure that we have a strategic and consistent approach across Wales. I therefore join others who give the Government credit for the extensive scrutiny that has taken place in the run-up to the debate. As we have heard, the Welsh Grand Committee debated the Bill last July, the National Assembly for Wales considered it in August, and the Select Committee on Welsh Affairs produced a report—we have just heard some of its findings—and the Assembly also published a report. That is an example of the way in which value can be added through detailed consideration on a cross-party and cross-body basis before the Government commit themselves to a Bill.

I am pleased that the Minister noted the benefit of consulting Opposition parties, including the Liberal Democrats and the Conservatives, and I am glad that we assisted him. Indeed, if he would like to delegate any substantial part of his ministerial responsibilities, Mr. Wiggin—I am sure that I can speak for him—and I would be willing to help him out on a daily basis on the assumption that we got a proportion of his salary.

Photo of Lembit Öpik Lembit Öpik Shadow Secretary of State for Northern Ireland, Northern Ireland Affairs, Shadow Secretary of State for Wales, Welsh Affairs

Indeed, it could be a good example of that. Perhaps we can discuss that after the business today.

The Minister outlined some of the key benefits of the Bill. They include a single audit body for Wales instead of two, making the public auditing process simpler and handling cross-border working coherently. That can lead to a practical improvement in cross-border relations, for example, in the health service. I have previously raised points about securing English health provision for Welsh patients. There has been some debate about issues that relate indirectly to auditing when I have discussed those matters with the Royal Shrewsbury hospital. If the cross-border working element of the Bill is effective, it could improve access to health provision for Welsh patients. Although the measure may, at first sight, appear theoretical and somewhat removed from the interests of the public, some of the aspects that the Minister highlighted will provide a practical benefit.

An extensive debate was also held in another place, where amendments were tabled. I am obliged to pay tribute to my Liberal Democrat colleagues in another place, who, in their quiet and methodical way, ensured that best practice was derived from Conservative and other Members of the House of Lords.

Clause 54 probably occupied the greatest amount of time. It places restrictions on the disclosure of information obtained by the Auditor General or an appointed auditor about local government audits and studies, except in some specified circumstances. Other speakers have already given a definition and I therefore do not need to dwell on that. There was great concern that the clause provided for things for which no one was calling. I am optimistic about the Government's willingness to alter that, because they appear to have accepted the arguments. Perhaps I am simply an optimist or willing to trust the Minister because he has an honest face, but I believe that he will ensure that the issues that relate to clause 54 will be resolved before the end of 2004.

I have already quoted Lords Evans's words when he made an explicit commitment to resolve the section 49 element of the difficulties. The Minister went a little further today when he said that he would try to ensure that the consequential alterations that have to be made to clause 54 would happen by the end of the year. He can correct me if I am wrong, but I believe that those two assurances mean that the Minister will deliver the desired outcome. In a sense, the question is not whether the Minister's words and those of the Lords are appropriate, but whether to trust the Government. I trust them on the matter and can envisage no reason why they would renege on something for which they have accepted the arguments.

I was intrigued by the observations of the hon. Member for Leominster about the importance of whistleblowing. I suppose that, after all these years, the Conservative view of whistleblowers has altered. Whistleblowers did not have a good time between 1979 and 1997. I chuckled quietly to myself when I heard the hon. Gentleman concerning himself about the sanctions that clause 54 might grant the Government, including imprisonment. Unless my memory deceives me, at least one whistleblower went to prison between 1979 and 1997 under a Conservative Government, explicitly for blowing a whistle on them.

Photo of Bill Wiggin Bill Wiggin Shadow Secretary of State for Wales

While the hon. Gentleman was chuckling to himself, did he consider the difference between audit information and the Official Secrets Act?

Photo of Lembit Öpik Lembit Öpik Shadow Secretary of State for Northern Ireland, Northern Ireland Affairs, Shadow Secretary of State for Wales, Welsh Affairs

Yes, but until now, the hon. Gentleman made no distinction between whistleblowers who are acceptable and those who are not. He begins to box himself in if he claims that whistleblowers on audit information should be given more latitude than those who have a similar, principled concern about official secrets. One could go as far as to say that whistleblowers violate the Official Secrets Act in the public interest because they feel a greater moral imperative than someone in an audit office, and that they therefore act extremely nobly.

Photo of Bill Wiggin Bill Wiggin Shadow Secretary of State for Wales

I am nervous about straying out of order but the hon. Gentleman should consider the difference between the Official Secrets Act, which seeks to protect our servicemen and their lives, and audit information, which under the Bill, is likely to be relevant to local authorities and the way in which they spend public money.

Photo of Lembit Öpik Lembit Öpik Shadow Secretary of State for Northern Ireland, Northern Ireland Affairs, Shadow Secretary of State for Wales, Welsh Affairs

We could go on about different levels of whistleblowing, but the hon. Gentleman makes a fair point and I shall not play games. There are different levels, but I am encouraged by the Conservatives' recognition that there are times when people should be entitled to blow a whistle without recrimination from Government. That must be good news for whistleblowers everywhere in the Conservative party. If they have information that could be in the public interest, they might even be entitled to a community service award for blowing their whistles.

I have one last thought about clause 54: the only thing that the Minister did not explicitly describe was the mechanics of ensuring that the clause is brought into line with the promises that he made today. I would be grateful if he could briefly outline the input that the House will have into the changes that hon. Members on both sides agree will be useful.

I can say without fear of contradiction that this is the greatest Public Audit (Wales) Bill ever to be laid before the House. Although it might not set the good people of Montgomeryshire alight with excitement, they stand to gain from it practically through a more rational, strategic and simplified approach to cross-border auditing. If the Bill is successful in its goals, I fully believe that it will help us to have a sound and sensible public audit of public money, and that it will ensure that the audit process is done once rather than twice, as it is at present because of the duplication in the system. We shall probe some minor changes in Committee, but I am satisfied that there will be enough time to do that under the programme that the Government are proposing. For that reason, the Liberal Democrats support the Second Reading.

Photo of Alan Williams Alan Williams Labour, Swansea West 2:21 pm, 17th June 2004

I welcome the consensus on the Bill. In my Liaison Committee role, I see part of that being attributable to its having had a pre-legislative and draft legislative stage. Strangely enough, that was common practice in the 19th century. It was dropped in the last century and has been embraced again by the previous and current Leaders of the House with the full support and encouragement of the Liaison Committee.

In a different role, as the Chairman of the Public Accounts Commission in this House, may I say how welcome it is to have this additional armament relating to the scrutiny of public expenditure? It has always been a criticism of the Public Accounts Committee—a remarkable Committee on which I have served for 14 years—that it can deal with only about 50 reports in a year. With £650 billion worth of public expenditure and income to scrutinise, 50 inquiries a year can obviously only scratch the surface. As someone who was, and is, no enthusiast for devolution, may I give it one point of credit for having enhanced public audit in this country? Scotland and Wales, which previously had perhaps only one or two inquiries into their expenditure during the year, now have their own respective bodies. I welcome this strengthening of the organisation in Wales.

In fact, public audit to some extent rebuts the argument that we do not get anything for nothing, in that the National Audit Office has claimed for years that it makes enough savings to reclaim its costs eightfold each year. Mr. Liddell-Grainger asked who audits the auditors, so he might be interested in this. As Chair of the Public Accounts Commission, I set up an independent value-for-money audit of the National Audit Office, which has reported in the last couple of weeks. That report confirms the NAO's own estimate that it makes eight times as much for the taxpayer as it costs the taxpayer. I hope that the Bill will create a similar experience for Wales.

Like the Under-Secretary of State for Wales, my hon. Friend Mr. Touhig and those new converts on the Conservative Benches, I have a great sympathy for whistleblowers. I remember that, when Rhodri Morgan was in this House, he had a system whereby his telephone was linked to the fax machines in the Wales Office. In some way, whispers used to get to him about what was going on in Wales. On one occasion, he came to see my hon. Friend Dr. Howells—who was also on the Public Accounts Committee at the time—and me. A group of civil servants had asked whether they could meet the two of us because there was something going on in the Welsh Development Agency that they felt needed to be exposed.

We offered to meet the civil servants in Cardiff, but they said, "No, we're known in Cardiff. We'd be recognised there, and you'd be recognised there. Can we come to London?" So we met them in one of the "W" rooms here. We were about to produce a report from the National Audit Office on excessive car expenses in the WDA, and these two WDA officials came to us and said, "Look, we'd better tell you what's going on there, but you mustn't say where it came from." What they exposed was a conspiracy to privatise two sections of the WDA: the property section and the consultancy section. Feasibility studies had been commissioned on that proposition, yet there was not one word of record of them in the minutes of the board, though the board was involved. There was no record of feasibility studies where one might expect to find them because they had been farmed out to irrelevant divisions in the WDA. One head of a division was so worried about what was going on that he kept photocopies of everything that he had in an attic, in case the situation was exposed at some time.

Eventually, an ignominious report was produced on the WDA's conduct, which led to resignations. The board had deliberately conspired to conceal what was happening. We subsequently discovered that the only person who seemed to know about it at this end was the then Secretary of State. In our National Audit Office report, we made a recommendation that there should be protection for whistleblowers when the national interest would benefit from their actions.

It was a paradox for someone who is anti-devolution, such as myself, that there were two exposures at the WDA—another one followed—and the Development Board for Rural Wales was also in the queue. So we had a neurosis about quangos in Wales, which led to the clinching argument in the devolution debate: "We will have a bonfire of the quangos." The debate was won by only a quarter of 1 per cent., and without the bonfire argument, it would not have been won. I would have been happy if it had not been, but that is another point. I would suggest that the new body, as part of its first inquiry, should ask, "How did we lose the bonfire of the quangos? Where in the system did it disappear?"

I welcome the opportunities that will be created by the evolution of separate auditing bodies for Scotland, England, Wales and Northern Ireland. Each, in its own devolved way, will be experimenting individually with methods, approaches and structures. This will give us the opportunity to spend much more time carrying out comparative studies of the ways in which the benefits or disadvantages of different methods emerge in the various parts of the United Kingdom—I have asked the National Audit Office, through the forum of auditors, to consider this—so that we can all learn from best practice. In the case of Wales, for example, I think that most Welsh Members would agree that an area that requires such attention is the delivery of the health service. I am glad that I wrote to the NAO and asked for a comparative examination of the facilities, waiting lists and so on for hip, knee and cataract operations in Wales, England and Scotland. I believe that such a report is relatively imminent and may be available in the summer.

I welcome this Bill, it enhances the auditing facilities, and I wish the new organisation well.

Photo of Hywel Williams Hywel Williams Shadow PC Spokesperson (Work and Pensions), Shadow PC Spokesperson (Health), Shadow PC Spokesperson (International Development) 2:30 pm, 17th June 2004

It is a pleasure to follow Mr. Williams and to hear his positive comments on the setting up of this body in Wales. We cannot claim him as a convert, as he has said explicitly, but it is pleasing to hear his comments, including his pertinent point about quangos. If he is looking for the ashes of the bonfire of the quangos, or perhaps even for some action, he should question not the Assembly, but his friends down there who are in charge. In some ways, it is not an Assembly matter, although it has joint responsibility, and has in the past acted more corporately than it does now.

On behalf of Plaid Cymru, I join the general welcome for this Bill, which confers new functions on the Auditor General for Wales in setting up this powerful new body for audit. We hope sincerely that its effects will be apparent very quickly. We hope that it will lead to much greater scrutiny, accountability and transparency in relation to public expenditure in Wales, all of which will be very welcome. We agree that a single public audit body for Wales headed by the Auditor General is most desirable, given the current arrangement in Cardiff and the duplication.

Some hon. Members might recall the slightly jocular tone that I adopted when I made a speech on this matter in the Welsh Grand Committee[Interruption.] It was a thin house. I said:

"The word 'auditing' does not conventionally gladden the heart or excite the nerves . . . it is hardly likely that anyone's famous last words would contain the immortal line, 'I wish I had done a bit more auditing'."—[Official Report, Welsh Grand Committee, 15 July 2003; c. 7.]

We would do well, however, to note and praise the value of the work done by the Audit Committee of the National Assembly. My impression is that it has worked well, and without some of the pyrotechnics that we have seen in other aspects of the Assembly's operations. It has worked well jointly with all the parties that have been involved, and it has worked hard and to a purpose. It has adopted a practical approach.

The complaint is sometimes heard in the less enlightened parts of the press, especially in north and west Wales, "What has the Assembly done for us?" If we consider the work of the Audit Committee, it claims to have saved at least £90 million out of a budget of £10 billion to £12 billion, depending on which year one counts. That might not seem much, but £90 million is a great deal of money, which, I am sure, has been very well used.

Gareth Thomas made the point in the Welsh Grand Committee, which was also raised earlier, that the regulatory impact assessment put the cost of the move at £500,000, but we understand that that figure has increased. I would be grateful if the Under-Secretary could say what the future cost is likely to be, if he is in a position to do so. That would be a matter of interest to Members of the House and to the public in general in Wales. The proper audit of public expenditure is such an important aspect of securing the public good that we should know what it costs, and what the regulatory costs are. Certainly, we should be clearer about the amount of money that has been saved. With due respect to the Under-Secretary, the Secretary of State and previous Secretaries of State, I would venture that the savings that have been achieved since the establishment of the Assembly might not have been achieved under the pre-Assembly arrangements. Judging on the past record, therefore, this Bill promises much. We will look for reports of positive results in the future.

As the Under-Secretary and other Members have said, this Bill has been the subject of a great deal of scrutiny. Irrespective of the debates and discussions in Cardiff, the Welsh Affairs Committee and Welsh Grand Committee have also considered the matter. Of course, it has also been the subject of the usual procedures in the passage of Bills through the other place. On behalf of Plaid Cymru, I hope that it will now proceed quickly to Committee, and that it will be examined in the proper amount of detail. We will be looking to make a positive contribution to that process.

Members have already referred to a number of improvements achieved in the other place. Plaid Cymru Members were very pleased to note the Government's change of heart on clause 54. I am glad that the Government saw sense, or at least realised that their approach, and that of the Wales Local Government Association, was inconsistent with the principles of freedom of information, and was thus unsustainable. We will be looking to make sure that the Government keep their word.

Photo of Lembit Öpik Lembit Öpik Shadow Secretary of State for Northern Ireland, Northern Ireland Affairs, Shadow Secretary of State for Wales, Welsh Affairs

For the avoidance of any possible doubt, is the hon. Gentleman aware that quite a few people in local government in Wales want this change, too? Delyn Liberal Democrats, for example, are very keen to ensure that these changes are made, because they have concerns that some of the bad things that happened in Flintshire might end up being covered up instead of exposed if clause 54 is not amended. Does he therefore agree that since the argument has been totally won, the Under-Secretary is under a tremendous obligation to make sure that he delivers to the timetable that he has promised, which is this year?

Photo of Hywel Williams Hywel Williams Shadow PC Spokesperson (Work and Pensions), Shadow PC Spokesperson (Health), Shadow PC Spokesperson (International Development)

I am grateful for that intervention and I agree entirely with the hon. Gentleman. As I said, we will make sure that we do our best to hold the Government to what the Minister has said this afternoon. Rather than carp at any questions about motivation or what has happened in the past, I want to accept and celebrate the change in the other place.

I hope to have the opportunity in Committee to examine this Bill in detail. Briefly, I want to comment on a couple of issues that have been raised by other Members. To make a broad point, were we to compare part 2 with part 3, we would see that part 2 is concerned with the audit of local government bodies, and runs to four chapters and 47 clauses. Part 3, however, is concerned with the NHS and contains a mere five clauses. How does one account for this startling variation? Is audit in the NHS simpler or more straightforward? Given the huge expenditure on the health service, I scarcely think so. Is it that local government is inherently more complex? As a former council employee, albeit a long time ago, I do not underestimate the complexity of local authority finance, even in such well-run authorities as Gwynedd county council, both the old and the new. We have had yet another reorganisation of the health service, and whatever its merits or demerits, no one could claim that the establishment of 22 local health boards and a wide variety of some 30 other bodies in the new system is a move towards simplicity.

The NHS is a complicated organisation, and has five clauses about it, whereas local authorities, which are perhaps equally complicated, have a huge section of their own. Perhaps it is not that local authorities are more complex, or that the health service is a beacon of organisational simplicity and clarity, but that the clauses relating to the health service are new, whereas the chapters and clauses relating to local government replicate the existing legislation, but with a Wales tag. For that reason, many who welcome the intention and hope sincerely that the Bill will increase accountability also consider that an opportunity has been missed—the opportunity to simplify existing law and write new law suited to Welsh circumstances, rather than producing a Welsh version of the arrangements for England and Wales.

As others have said, the reproduction and adaptation of existing legislation has led to inconsistencies. For instance, the penalty arrangements in clauses 5, 19 and 29 vary. One clause provides for a £20 fine for each day on which an offence continues, while the others do not. Some might say that fining public bodies is not the right way in which to proceed. After all, the auditor has a right to seek injunctions; alternatively, the miscreant's authority could be hauled before the Audit Committee. Others might say that a £20-a-day fine is derisory, and hardly constitutes encouragement to comply.

All I am saying—and I will repeat it in Committee—is that there is an inconsistency in the Bill which arises from the nature of the legislation being reproduced in it. I shall not proceed with that critique now, but I assure the Minister that my party will be tabling amendments.

Let me conclude by emphasising the importance of keeping the Assembly and the Audit Committee in the loop, engaging them when appropriate, and enabling them to continue their good work in maintaining the high standards of probity in public expenditure that we value so much.

Photo of Andrew Robathan Andrew Robathan Conservative, Blaby 2:42 pm, 17th June 2004

This is not a bad Bill, but as we have heard from Hywel Williams and the Chairman of the Welsh Affairs Committee, Mr. Jones, it could be improved. Nor is it a small Bill, and it will require detailed scrutiny.

Some may ask why an English Member representing a midlands shire constituency should speak on this Bill. It is true that there are not quite as many Conservative MPs in Wales as we might wish, but I do have Welsh antecedents. My father was born in Llandaff, and my grandfather was headmaster of Llandaff cathedral school. Both my great-grandfather and my great-great-grandfather were doctors in Risca, in the Minister's constituency of Islwyn, in the valleys. Although I am not actually Welsh myself, I can claim to be Welsh when I want to be. I am certainly much more Welsh than the Secretary of State, who has no Welsh connections at all apart from having happened to end up in his present berth in Neath.

Photo of Hywel Williams Hywel Williams Shadow PC Spokesperson (Work and Pensions), Shadow PC Spokesperson (Health), Shadow PC Spokesperson (International Development)

Does the hon. Gentleman agree with a past president of my party, Dr. Gwynfor Evans, who once famously stated that anyone can be Welsh as long as he is prepared to take the consequences?

Photo of Andrew Robathan Andrew Robathan Conservative, Blaby

Funnily enough, I do agree, not least because those who stand next to me in church always say, "You must have some Welsh antecedents because you sing so loudly"—if not so beautifully.

Photo of Michael Lord Michael Lord Deputy Speaker (Second Deputy Chairman of Ways and Means)

Order. It might be a good idea if Mr. Robathan returned to the subject of the Bill.

Photo of Andrew Robathan Andrew Robathan Conservative, Blaby

I accept your strictures, Mr Deputy Speaker. Apart from anything else, I believe in neither the cricket test nor the football test. Furthermore, I think that football tends to be played by rather overpaid louts. I say that in my constituency, so everyone knows that it is what I think—and I believe it has been proved this week.

Like Mr. Williams, I do not particularly like devolution, and I do not particularly like the Welsh Assembly, for which only one out of four Welsh voters voted. In fact, I have heard Welsh Members of Parliament—not members of my party—describe the Assembly as a rather second-rate county council, although I accept that it is doing good work.

Photo of Bill Wiggin Bill Wiggin Shadow Secretary of State for Wales

My hon. Friend will not need to be reminded that the Conservative Assembly Members were recently proved to be the most hard-working group. Perhaps that is one reason why he was able to be complimentary about the Assembly.

Photo of Andrew Robathan Andrew Robathan Conservative, Blaby

I did not know that, although of course I support the Conservative Assembly Members. Nevertheless, I am not sure that Wales is as much a better place as it was claimed that it would be when the Assembly was established. It is up to the Welsh to decide what form of government to have, but I repeat that only one person in four voted for the Assembly.

It is because of my distrust of devolution that I have certain qualms about the Bill. It appears to be non-controversial, but the taxes that will fund it are paid by all taxpayers. Llew Smith, who is not here now, pointed out that the costs of the Assembly, originally estimated at £20 million a year, are now £100 million.

According to the explanatory notes, the compliance costs will be borne by the Assembly, and the Assembly considers that the Bill will not result in any additional budgetary costs to it or other public bodies. As I have said, however, the original estimate of the Assembly's costs was itself wrong.

I understand that we shall be bringing together 45 staff from the National Audit Office and 200 from the Audit Commission. I hope that that will not involve huge compliance costs. I am not particularly au fait with Cardiff these days. I hope the Minister will tell me whether a new building will be needed, and how the costs will be paid. I understand that the costs of setting up the new arrangements will be £1 million.

I was particularly puzzled by what the right hon. Member for Swansea, West said about the Public Accounts Commission. It seems to me that the Public Accounts Committee here should be able to examine what is done in Wales. The right hon. Gentleman said that it could not, whereas the Minister said that it could. The discrepancy needs to be cleared up.

According to clause 40, any public-interest report will be sent to the Home Secretary—a UK post, obviously. Surely it should also go to the Public Accounts Committee as well if that is requested.

We have discussed the conflict between the Freedom of Information Act and clause 54. It is important to establish whether the Act will override the clause. I do not impugn the Minister, but I think that the issue should be sorted out now, in the Chamber. After all, there is no mad rush for the Bill.

The way in which the Bill reflects on whistleblowers has also been discussed. The Minister has a very good record in that regard. I remember a debate on the subject. I think I supported the Minister then, which was surprising, as one or two Whips were quite keen for me not to.

Where is that bonfire of the quangos? We should not take everything on trust.

A piece of non-controversial legislation is all too easy to nod through. Much of our legislation is not sufficiently considered. I do not pretend to be either an accountant or an expert on auditing, nor do I represent a Welsh seat; but I think it important to the stature of the House that we produce well-thought-through, precise, detailed legislation. Questions have already been asked about various aspects of the Bill. Let me add that we have a duty to ensure that any moneys raised from our constituents and spent on whatever we decide is spent well.

Photo of Ian Liddell-Grainger Ian Liddell-Grainger Conservative, Bridgwater 2:49 pm, 17th June 2004

As a Scotsman hiding in Somerset, I claim even less reason than my hon. Friend Mr. Robathan to speak in the debate. Someone once asked me what my view of Wales was from my seat, and I said, "Overlooking it." I apologise to all Welsh Members for that faux pas.

I agree with other hon. Members that this is not a bad Bill, but I should like to speak about a part of the Bill that I do not like. In a wonderful bit of double speak, clause 6 refers to the provision:

"The Auditor General for Wales may borrow sums in sterling by way of overdraft or otherwise for the purpose of meeting a temporary excess of expenditure over sums otherwise available to meet that expenditure."

That is my problem with this generally good Bill.

The whole point of having an Audit Commission is to be able to follow an audit thread. I am worried that the Auditor General can borrow money, even on a temporary overdraft basis, in order to follow an audit thread for one simple reason. If he cannot follow the thread through private or public accountability—in other words, if it has been delegated to a private auditor—it means that either the National Assembly for Wales or the British taxpayer will have to be pick up the tab. There is no other way round it. In respect of Wales, of course, it means the Welsh taxpayer.

That is my main difficulty with the Bill. The audit trail has to be examined, but not through the eyes of the Welsh, the Scots, the Irish or anyone else. It must be possible to follow a thread where public money is involved. Too often in this country, audit trails have left the taxpayer out of pocket by millions of pounds with absolutely no benefit—and certainly no prosecution—at the end of the day. It worries me that we are allowing the Auditor General to run an overdraft. Why should he need to run an overdraft? Do we not have enough money in the country? Is the Chancellor not telling us something? Are we running all this on Barclay cards? That is not the way to do an audit trail.

The fees are another problem. New section 93A in clause 7 states:

"The Auditor General for Wales may charge a fee for auditing a person's accounts."

If he is delegating that responsibility to a well-known firm of accountants—it does not matter which—and that firm is unable to retrieve the money from the person because of a dispute, what happens? Does the Auditor General for Wales sue the company to get the money back or does the delegated auditor, a private individual, sue for it? If the company goes into liquidation in the meantime, what do we do? Do we pursue the company directors, or does the Welsh Assembly have to pick up the tab? Exactly what would happen in those circumstances has not been clearly explained.

Much has been said about clause 5. It is a crucial provision, dealing with auditing of registered social landlords. I doubt whether many Members would be unable to recall occasions—I have spent only three years in the House—on which such landlords were brought into question and people were anxious to follow them up. The noble Baroness Noakes said:

"The criminal law is a blunt instrument for a public audit regime . . . I am reinforced in this by the absence of criminal sanctions".—[Hansard, House of Lords, 1 April 2004; Vol. 659, c. 1461.]

That just about sums it up. The Minister said that we audit social landlords correctly by our ability to follow the audit trail and secure what information we want. However, at the end of the day, we do not have a criminal sanction. Social landlords can be very good at disappearing. A company may have a problem, the social landlords may leave, the company goes down the pan and once again the taxpayer is left to pick up the bill. Will the Minister reflect on Baroness Noakes' view of the criminal law as a blunt instrument and ensure that people realise that it is unacceptable to walk away from a company because the Audit Commission of Wales is in pursuit.

There are nine subsections to clause 5, which gives the Auditor General the ability to pursue reasonable costs, but when he delegates the responsibility for investigating a company, who takes the decision? Is there a time limit and a budget? Is there a narrow or broad brief, or is the delegated body asked to write its own brief? I ask those questions because we all know what happens—I am a capitalist and do not disapprove of commercialism—when something is given to a private company. It will obviously try to keep it all going and there is a tendency—dare I say it to any lawyers or accountants in the Chamber—to egg up the costs. What powers will the Auditor General for Wales have to rein in costs at all levels? Clause 5 does not make that clear, so we may have to amend later clauses to tighten it up.

I want to move on to the enormous amount that the Audit Commission has achieved in the last year. It has dealt with late payments to farmers in Wales, the National Council for Education and Training for Wales, compensating farmers for tuberculosis—I had to get that in somewhere—in Wales, the renewal of private sector housing, the management of the delivery of hospital cleaning services, the procurement of primary care medicine and the management of further education and estates in Wales.

I have two questions for the Minister. First, has the Audit Commission done everything that it wanted? At the moment it has a very large staff—about 4,000 people—because it covers England and Wales. Are there further objectives that have been prevented because of stepping on the toes of the Welsh Assembly? When the Bill is enacted and the Audit Commission for Wales is established, it will want to do its job to the best of its ability. As my hon. Friend asked a few moments ago, will there be sufficient numbers of staff seconded into Wales to carry out the role properly? What it did last year certainly amounts to an ambitious programme, never mind what it might be asked to do in the future. Currently, there 2,300 staff dealing with England and Wales, including 1,500 commissioners and 450 inspectors. I believe that the number of staff taken on specifically for Wales is way below even a third of that. It is important to look further into that problem.

Costs are also important. The fifth report of the Welsh Affairs Committee supplies the figure of £500,000. The report states:

"We have to express some concern that there is as yet no realistic published estimate of set-up costs . . . or savings, arising from" the new office. It continues by stating that that is

"exactly the sort of failing for which auditors are rightly swift to criticise other organisations. We hope that . . . a clearer idea of costs" will emerge. Does the Minister have any idea of the costs that will accrue? I see that the Chairman of the Welsh Affairs Committee is in his place. It is surely crucial to know what sort of budget the Auditor General for Wales will have on day one. Presumably, he will want to make progress as quickly as possible when the Bill is enacted. Can the Minister give us an assurance about the total costs?

In conclusion, this is a good Bill, but it does need tweaking. Some glaring provisions stand out and need to be amended. I have already mentioned the point about the criminal law. The provisions need tightening up. Cross-border co-operation is important—I do not mean that Wales is not part of Great Britain—so the provisions must be sensible. If we cannot follow up the trails properly, every one that the Auditor General wants to pursue will fail. In the eyes of the law, the job will not be deemed to have been done sufficiently, which cannot be acceptable to the Minister. If we need retrospective information, the Minister must ensure that the law gives us the ability to use it. It is all very well for the Bill to say that it can be done, but when there is no tie-up between England and Wales, following the split, there is the possibility that many things that desperately need to be pursued will fall through the lines.

Photo of Hugo Swire Hugo Swire Shadow Minister (Culture, Media and Sport) 2:59 pm, 17th June 2004

The Opposition broadly welcome the Bill, as has been heard this afternoon. It must make sense to consolidate the audit arrangements for public bodies in Wales by replacing the Auditor General for Wales and the Audit Commission in Wales with the Wales Audit Office or, as it is called—this might be one of my few attempts at Welsh this afternoon—y Swyddfa Archwilio Cymru. I think that my hon. Friend Mr. Wiggin will squirm in his seat at that when he reads the Welsh press tomorrow. He, of course, is a man who started off by learning the Welsh national anthem and I am told that he is progressing well in that language. I have to say that my credentials are somewhat more challenged, in that I took a lot of convincing that Mark Tami, who was in his place earlier and who serves with me on the Northern Ireland Affairs Committee, was not in fact a Member of Parliament for Scotland—a mistake that I made early on in my parliamentary career.

We will nevertheless put that behind us and move on to the substance of the matter before us this afternoon. The Minister was, in his usual manner, reasoned, conciliatory and generous to many this afternoon, including the Select Committee on Welsh Affairs, and we thank him for that. I thank him, too, for the tribute that he paid to our Conservative colleagues in the other place. We all agree that their diligence has ensured that this Bill has been greatly improved. It has to be said, however, that some inconsistencies and genuine concerns remain.

It is worth reiterating that the Opposition are disappointed that this is the only piece of Wales-specific legislation, in spite of the fact that the National Assembly for Wales has proposed five Bills. Welsh Conservatives, Liberal peers, Plaid Cymru and Labour, in the shape of Lord Morris of Aberavon, have all, as we have heard, shared that sense of disappointment.

In his opening remarks, the Minister referred to the cross-border reviews and the co-operation between England and Wales. That part of the Bill is no doubt to be welcomed. However, what is perhaps less welcome is the Government's failure to introduce something new and radical—something Wales-specific. By mirroring the Audit Commission Act 1998, the Government have missed a trick and, as my hon. Friend the Member for Leominster has said, we shall seek to remedy that in Committee.

Llew Smith and Mr. Williams both mentioned the bonfire of quangos—or perhaps we should say the "bonfire of the vanities"—and commented that there has not been so much as a spark, let alone a bonfire. Perhaps that should now be looked at as a priority. The Government's financial record on matters Welsh is, I have to say, a little questionable. I asked the Secretary of State for Wales back in May what the cost of the Welsh Assembly to the public purse was estimated to be at the commencement of that project, and the answer was that the additional running costs of the Assembly would be £15 to £20 million more than the cost of running the Wales Office. That is in addition to the £55 million or so that we are now facing for the establishment of the Welsh Assembly. Those costs in no way mirror those of the Scottish Parliament, but we can see how the costs of such projects can escalate very quickly.

Photo of Ian Liddell-Grainger Ian Liddell-Grainger Conservative, Bridgwater

My hon. Friend is making interesting points. Perhaps I may help him. A major part of the draft Public Audit (Wales) Bill was devoted to the cost of setting the Welsh Assembly up but this Bill contains no actual breakdown of costings. Does my hon. Friend agree that the Minister must give costings in line with what the Welsh Affairs Committee asked for?

Photo of Hugo Swire Hugo Swire Shadow Minister (Culture, Media and Sport)

My hon. Friend makes a customarily good point, but I shall turn to costings in a minute, if I am able to in the limited time that I have left this afternoon.

The Minister spent much time telling the House how the Audit Office will scrutinise expenditure in Wales, but not much time telling us what the cost of the legislation will be. The Government have already admitted that their initial start-up costs were inaccurate, and the latest regulatory impact assessment has almost doubled that cost, from £500,000 to just under £1 million. It would therefore be helpful if the Minister could give us an up-to-date and, hopefully, final figure when he replies this afternoon.

My right hon. Friend Mr. Knight, who is no longer in his place, made a good point about the scrutiny of expenditure in Wales by the Public Accounts Committee. I hope that the Minister will seek to address that concern later this afternoon.

It would be quite wrong for me to continue in my comments without thanking those two excellent volunteers, my hon. Friends the Members for Blaby (Mr. Robathan) and for Bridgwater (Mr. Liddell-Grainger), who made contributions in their own way. My hon. Friend the Member for Blaby, who was quick to stress his Welsh antecedents, comes from a distinguished line of doctors and teachers from Llandaff and was more than happy to take the responsibility for being Welsh. He raised concerns about costs, and questioned whether a new building was needed, which, again, has not come out so far in the debate. He thought that well-thought-out and precise legislation was needed, and that we had a duty to ensure that money raised from our constituents was well spent. I think that most of us in the House would agree with those sentiments. Those are the prevailing sentiments with any kind of legislation, certainly among Opposition Members.

My hon. Friend the Member for Bridgwater, who takes the responsibility of being not a Welshman but a Scot in Somerset—perhaps an altogether more difficult position—made some probing interventions throughout the debate and, like all good Scots, concentrated on the financial aspects of the Bill. He made a series of points on the auditing of social landlords. Those good points were well made, and are worthy of a response from the Minister. He concluded by saying that he thought that although this was a good Bill, it needed tweaking. I look forward to joining him in the tweaking process in Committee later on this Session.

The Minister made many reassuring noises about clause 54 and about how clause 49 was to be amended in favour of disclosure. However, we are being asked to accept that those very necessary changes will be made after enactment—although in all fairness, by the end of 2004. My party believes that it is quite wrong and unnecessary to introduce new legislation without making those fundamental changes at this stage.

We are, it must be remembered, talking about large sums of money, and we have only to look to Brussels and the corruption in the European Union to see how whistleblowers have been treated in the past—and yes, regrettably, by a Welsh ex-Labour MP and party leader. That is in sharp contrast with the excellent record of the Under-Secretary of State for Wales, Mr. Touhig, who, ironically, succeeded the gentleman to whom I am alluding in that seat. Lembit Öpik went off at a slight tangent about whistleblowers. I know that he plays in a band, so perhaps he should confine his blowing to his harmonica.

For once, however, the House is on the whole in considerable agreement on the Bill. We think that it has merit, and we look forward to the Committee stage, when we can introduce those amendments that will make the Bill even better, more workable and more relevant to the people of Wales. I look forward to the Minister's response, and hope very much that rather than repeating some of the points that he made in his very good introductory speech, he will seek to answer some of the excellent probing points made by Opposition Members this afternoon.

Photo of Don Touhig Don Touhig Parliamentary Under-Secretary (Wales), Department for Constitutional Affairs, The Parliamentary Under-Secretary of State for Wales, Parliamentary Under-Secretary (Department for Constitutional Affairs) (also in Wales Office) 3:08 pm, 17th June 2004

With the permission of the House, Mr. Deputy Speaker, I shall reply to the debate. We have had an interesting and highly constructive debate on the Public Audit (Wales) Bill. Many good points have been made, and I can assure Members of all parties that the Government will consider those points carefully as we move towards Committee. The Bill's key objective is to create a simpler and more rational structure for public audit in Wales. That will break down operational boundaries and assist in the development and spread of best audit practice.

The Bill is based on the principle that public audit in Wales should be a simpler, more co-operative and more proactive process. It should reduce the burden of audit and inspection activity in Wales, without diminishing audit standards. That point was expressed by a number of bodies that responded to the public consultation on the Bill. For three years running, the Auditor General's annual report to the Assembly has shown that overall standards of financial management and probity are high. However, there can be no room for complacency and this Bill will ensure that we are able to build on that achievement. Through co-operation and consultation, the Bill will encourage a more strategic and inclusive approach to planning and carrying out audit, examination and inspection work. In addition, it will ensure that other bodies outside Wales can work with the Auditor General in developing areas such as audit standards and practice. That work has an increasingly international dimension.

The Auditor General and his staff have much to contribute. They have a wealth of expertise and experience, and it is fitting that they should play their full part. Some have said that this Bill is a patchwork of different provisions rather than a coherent whole. I disagree. Key people, such as the Auditor General for Wales and the director general of the Audit Commission in Wales, have wholeheartedly welcomed the Bill's proposals.

The very real benefits that this Bill will bring to the public audit process should not be lost in the wider debate. The Audit Commission in Wales, the Auditor General and the staff of the National Audit Office have done, and continue to do, excellent work in upholding and improving the high standards of public accountability that exist in Wales.

We have heard today about the pre-legislative scrutiny that the Bill has gone through. I pay tribute to the members of the Welsh Affairs Committee under the chairmanship of my hon. Friend Mr. Jones, and to those in the Welsh Assembly's Audit Committee who played a strenuous part in the consultation.

In my opening remarks, I took a number of interventions from Opposition Members, to which I shall now respond. Mr. Liddell-Grainger asked whether the Auditor General for Wales could appoint auditors for social landlords in Wales, and I want to amplify the response that I gave. The Auditor General for Wales has no power to appoint auditors to registered social landlords in Wales because such landlords are not public bodies, and not all receive their funding from the Assembly. However, he will be able to undertake value-for-money programmes in the registered social landlords sector, with the agreement of the National Assembly.

The hon. Member for Bridgwater also asked whether the publication of a report under clause 22 would breach the Human Rights Act 1998. The answer is no: local government bodies cannot be victims under the terms of that Act.

My right hon. Friend Mr. Williams made an important and welcome contribution about the locus of the PAC in respect of the National Assembly. The PAC has a locus, in the sense that the Government of Wales Act 1998 provides that the Assembly's Audit Committee can, on behalf of the PAC, take evidence on audit issues, and report back to the PAC. That is covered by section 102(2) of the 1998 Act.

Mr. Wiggin welcomed the Bill. He said that it was a good piece of legislation, but that some opportunities had been missed. I am sure that we will explore that further in Committee. He was concerned that, although the Auditor General could audit the NHS, he could not do the same for local government. That is because local government enjoys a distinct democratic legitimacy that is bestowed by the electorate. Health bodies do not have that, as their members are not directly elected by the public. The Government are keen to ensure that local government retains its democratic independence. That is why we feel it right that the Auditor General should not be the auditor of local government, but that he should be able appoint those who will perform that function.

The hon. Gentleman asked about the details of the orders to amend clause 54. At this stage, I cannot go into detail about how those orders will be drafted, as discussions are continuing. As soon as I have some information, I shall make it available to the House. If it becomes available while the Bill is in Committee, I shall bring it to the attention of colleagues, as I think that people should know the Government's plans.

Photo of Bill Wiggin Bill Wiggin Shadow Secretary of State for Wales

I am grateful for the Minister's kind offer. However, the Committee sittings may start as soon as next week, so he has only a small window of opportunity in which to deliver that information.

Photo of Don Touhig Don Touhig Parliamentary Under-Secretary (Wales), Department for Constitutional Affairs, The Parliamentary Under-Secretary of State for Wales, Parliamentary Under-Secretary (Department for Constitutional Affairs) (also in Wales Office)

I accept that, but I merely want to make it clear to the House that I shall do all I can to get that information to colleagues. I recognise that I am asking for support for the Bill, and that that requires a degree of trust that the Government will introduce amendments later in the year.

The hon. Gentleman mentioned whistleblowers. He was worried that they might be deterred, but I do not believe that the Bill will cause that to happen. The Auditor General for Wales is the prescribed person for the purposes of the Public Interest Disclosure Act 1998. My private Member's Bill that would have had the same effect was thwarted by the previous, Conservative Government. In fairness, I should say that the 1998 Act was introduced by a Conservative Member. It was supported by this Government and subsequently enacted.

Various hon. Members asked about the running costs of the Auditor General's office. The Auditor General can raise income through fees and charges. The gap between estimated income and expenditure is met by the National Assembly. I believe that, in 2003–04, that amounts to about £2.5 million.

In the Welsh Grand Committee, Mr. Evans raised the question of set-up costs, and various hon. Members asked the same question this afternoon. When we carried out the pre-legislative scrutiny, we gave a figure of £500,000 for set-up costs, but that was before a working group produced a detailed analysis. The new estimate is £987,000, but more than half the difference between that and the original estimate is accounted for by costs that were not anticipated originally. Non-recoverable value-added tax charges amount to £147,000, and £127,000 is accounted for in the appointment of a dedicated project manager. Originally, project management was to be done as an in-house exercise and funded by NAO and Audit Commission resources, but that is no longer the case. Finally, the Auditor General for Wales has estimated costs for information and communications technology at £350,000—over £150,000 more than originally anticipated.

The revised costs were considered and approved by the National Assembly's Audit Committee in May, and await approval by the Assembly's Finance Minister. I remind the House that, in evidence to the Welsh Affairs Committee in June 2003, Sir John Bourn said that the original estimate of £500,000 was a "ball-park" figure that he did not consider irresponsible. However, the estimates have had to be revised, and it is right that colleagues should seek—and be given—information about the new costs forecasts.

My hon. Friend Mr. Jones welcomed the improved access rights to be given to the Auditor General, and I am sure that all hon. Members agree with that. I want to emphasise again the important work that the Welsh Affairs Committee performed in the pre-legislative scrutiny. That scrutiny process is now a matter of course for Welsh Bills, and the Committee plays a vital role in that. It will now begin consideration of the draft transport Bill for Wales, which we look forward to debating in the Welsh Grand Committee, perhaps next month.

Lembit Öpik said that he had not been lobbied about an audit Bill by any of his constituents. I am not surprised at that, but I am sure that all hon. Members would agree that when something goes wrong with any public service issue and costs arise, we all turn to the auditors to find out why. He expressed concerns about clause 54 and asked what role the House would play in the amendment to which the clause refers. The amendment will be made through an order that will be laid and approved by a resolution of each House of Parliament. The same procedure will apply to the amendment of section 49 of the Audit Commission Act 1998. I stress that clause 54 would not prevent an auditor from disclosing evidence of corruption or malpractice if they encountered it and felt that they had a duty to bring it to the public.

The hon. Gentleman also spoke about the way in which the previous Government treated whistleblowers. He was right to make that point. Indeed, when I presented a private Member's Bill on the subject, it was thwarted by the previous Government, who did not wish to see it on the statute book.

My right hon. Friend the Member for Swansea, West welcomed the Bill. I was pleased about that because he brings considerable experience and knowledge of audit matters to the debate. All hon. Members value his contribution and he speaks with authority. I have no doubt that we will take account of the points that he has made and focus on them as we go through Committee stage.

Hywel Williams joined in welcoming the Bill. As I recall the Welsh Grand Committee debate, he was the only hon. Member who brought a degree of humour to our proceedings. We certainly enjoyed that, and I look forward to the contributions that he will make in Committee. He asked whether there was any information about the future costs of the new Wales Audit Office. The Auditor General will submit his estimate of income and expenditure to the Assembly Audit Committee in autumn this year in the normal way, and it is not possible for me at this stage to pre-empt those estimates.

The hon. Gentleman also asked how we could account for the huge difference between the sizes of part 2, covering local government, and part 3, on the NHS. Of course, the drafting and structure of a Bill are matters for parliamentary counsel. Hon. Members may recall that the Health (Wales) Bill, which reorganised parts of the health service in Wales, ran to 10 clauses, so one cannot read too much into the point that the hon. Gentleman made.

Mr. Robathan said that he felt that the Bill was not bad but could be improved. If he is on the Committee, I shall look forward to his contributions, because when I introduced my private Member's Bill to protect whistleblowers, I believe that he came into the Chamber in order to cause me some grief but was swayed by the power of my argument, and I certainly felt that I had an ally in him as we reached the conclusion of the debate. I was pleased to have him on my side, and was grateful for his contribution.

The hon. Gentleman also referred to the costs of setting up the office and asked where the office would be located. I will deal with that point in a moment. He also touched on the extensive pre-legislative scrutiny. He said that clause 40 required public interest reports to be sent to the Home Secretary, but asked whether they should not also be sent to the Public Accounts Committee. Clause 40 deals only with public interest reports on police authorities in Wales and that is why it is felt that the Home Office is the appropriate recipient of those reports.

The hon. Gentleman asked whether there would be new building costs. The new body proposes to operate from the existing accommodation. The offices of the Auditor General for Wales and the Audit Commission are in close proximity. When the leases of the property expire, a rationalisation of accommodation may take place, but it will be for the Auditor General to come forward with proposals.

The hon. Member for Bridgwater welcomed the Bill and made a number of important points. I will seek to cover some of them. He raised some detailed points to which I am not able to give a proper response today. I propose to write to him on any points that I do not cover and place a copy of my letter in the Library so that all hon. Members are aware of my responses. The hon. Gentleman asked what powers the Auditor General had to reign in costs at all levels. Contracts for the provision of services to the Auditor General will be the subject of the usual public procurement rules. He asked why there was a need for an Auditor General to run up an overdraft. It is overstating it to say that he would run up an overdraft. The facility gives the Auditor General the ability to cover short-term deficits of income and expenditure. The Auditor General's remit is expanding and this facility is also open to the Audit Commission and the Auditor General for Scotland. This aspect of the finances of the Auditor General for Wales would be subject to scrutiny by the Assembly's Audit Committee, and by the Auditor General for Wales' own external auditors.

Photo of Ian Liddell-Grainger Ian Liddell-Grainger Conservative, Bridgwater

The other part of my question was: what would happen if the money could not be reclaimed but had been borrowed? Who would be responsible for getting the money back if there was a shortfall?

Photo of Don Touhig Don Touhig Parliamentary Under-Secretary (Wales), Department for Constitutional Affairs, The Parliamentary Under-Secretary of State for Wales, Parliamentary Under-Secretary (Department for Constitutional Affairs) (also in Wales Office)

That is one of the matters that I will write to the hon. Gentleman about at a later stage.

I welcome Mr. Swire to his first appearance on the Front Bench in a Welsh debate. I look forward to his future contributions. He made some powerful points, and I am sure that we will welcome the contributions that he will make in Committee.

Photo of Andrew Robathan Andrew Robathan Conservative, Blaby

Will the Minister join me in hoping that my hon. Friend will be able to improve his accent and pronunciation of Welsh words?

Photo of Don Touhig Don Touhig Parliamentary Under-Secretary (Wales), Department for Constitutional Affairs, The Parliamentary Under-Secretary of State for Wales, Parliamentary Under-Secretary (Department for Constitutional Affairs) (also in Wales Office)

I have no doubt that the hon. Member for Leominster will be giving him some lessons, or that Labour and Opposition Members will seek to help him improve his pronunciation of Welsh place names. He has a long way to go, but if he is a willing pupil there are plenty of good teachers here.

Finally, I thank all hon. Members who have taken part in the debate today. The Bill is an excellent example of how the Government and the Assembly work in partnership in the best interests of the people of Wales, and I invite hon. Members to give it a Second Reading.

Question put and agreed to.

Bill accordingly read a Second time.