Schedule 2

Budget Responsibility and National Audit Bill [Lords] – in a Public Bill Committee at 2:15 pm on 3 March 2011.

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Question proposed, That the schedule be the Second schedule to the Bill.

Photo of Chris Leslie Chris Leslie Shadow Minister (Treasury)

Essentially, I wish to reiterate—I mentioned this in debating the previous clause—that if the Minister is able to give us a sense of the total cost of the governance structures and arrangements, it would be useful. There are a number of other little observations that are worth mentioning. We had an interesting debate earlier about how it was exceptional and perhaps inappropriate for the Treasury Committee to have oversight of the appointment of non-executive members of the OBR. However, I note that, under schedule 2, all non-executive members of the NAO are to be appointed by the Public Accounts Commission. That is obviously a slight problem in her argument. There are parliamentary processes regarding the appointment of non-executive members. If the Minister could explain the consistency of her argument on that point, it might be useful.

There are no restrictions under part 4 regarding terms of appointment—determination of appointment—on the severance or compensation provisions. In fact, there is no mention at all of severance or compensation provisions. As I read the Bill, whereas in relation to the OBR the Treasury is taking a power in a general sense to make a payment in those circumstances, there is no provision for payment at all to be made on the termination of appointments. Therefore, I am assuming that whether because of voluntary or compulsory removal from office or departure from office, no compensation would be allowable for those persons either appointed to the board or employed at the NAO. That might be something that has been accidentally missed from the drafting. Obviously, we have time to address those things. By and large, the provisions seem otherwise to be fairly straightforward.

Photo of Justine Greening Justine Greening The Economic Secretary to the Treasury

As the hon. Gentleman has pointed out, schedule 2 sets out the various details of the National Audit Office’s constitutional functions, including rules on its membership, status and the appointment of members and staff. There are several different parts to that, as the Committee can no doubt see. He raises the question of whether all this governance will be somehow unwieldy in relation to Parliament’s role in scrutinising. That is a fair point to make.

I, too, have a huge amount of respect for Baroness Noakes in the other place. She has raised the issue of the challenges and concerns surrounding the expenses of the previous incumbent. She also referred to how, at the time, the House of Commons had not picked up on that or expressed concern. It may be that, with hindsight, we will see that the challenges that Members of this House had surrounding their expenses were part of the backdrop to an environment in which it was felt that the CAG’s expenses were not something to be raised. However, schedule 2 sets out a strong governance structure for the NAO.

The hon. Gentleman also asked about the total cost of change and of setting all this up. I do not have a specific figure for him right now, but I am happy to write to him with that. Our expectation is that the cost will be very small. As he is aware, there is already an NAO; it is just not a body corporate. In many respects, we are putting in place in legal footing for something that is already there. I take on board that point, but I suggest that the costs will not be excessive.

On the rest of the questions that the hon. Gentleman raised on parliamentary oversight, I should point out to him that the Public Accounts Commission will have to hold accountable not just the CAG—who is, of course, chief executive of the NAO—but the NAO chair. The Bill increases the Commission’s scrutiny role by requiring it to approve more of the NAO’s work than it did in the past. That includes the NAO strategy, the estimate, the code of practice on the relationship between the CAG and the NAO in paragraph 10 of schedule 3, and the annual report. He is right to point out that there is a desire to ensure that we are clear-cut about how the NAO will work alongside the Comptroller and Auditor General, and how both those roles will work alongside Parliament.

Finally, the hon. Gentleman asked about non-executive appointments to the NAO being made by the Public Accounts Committee. That happens because the NAO and its members are Officers of Parliament. The OBR is entirely independent and is a non-departmental public body. That is the reason for the difference, although he was right to pick up that point.

Photo of Chris Leslie Chris Leslie Shadow Minister (Treasury)

I sense that the Minister is winding up, but there was a specific point about compensation and severance arrangements; I could not see provision for that in the Bill, and I am anxious that that might fetter the Treasury’s ability to make those payments. If she wants to write to me on the subject, I am content with that.

Photo of Justine Greening Justine Greening The Economic Secretary to the Treasury

I will write to him on that. The commission will decide on the remuneration of the other non-executive members, but I will address his particular issue on severance in a letter.

Question put and agreed to.

Schedule 2 accordingly agreed to.

Clauses 21 and 22 ordered to stand part of the Bill.