Clause 1 - Abolition of existing audit regime

Part of Local Audit and AccountabilityBill [Lords] – in a Public Bill Committee at 9:45 am on 5 November 2013.

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Photo of Andy Sawford Andy Sawford Shadow Minister (Communities and Local Government) 9:45, 5 November 2013

Thank you, Sir Edward. Perhaps you will permit me a moment of leeway to say that I hope we shall address the points made by the hon. Member for Halesowen and Rowley Regis, but that the question is indeed proportionality and whether audit or inspection achieve the Government’s intended outcome.

To return to our amendments, we hope that, through integrated audit, not only will the best value for the public pound be obtained, but the new world of audit will be aligned to the new world of public service delivery, which is being shaped not from the centre but locally.

That is something that I welcome.

There is a big hole in the Bill. The right hon. Member for Hazel Grove referred to the Government’s amendments in this area, but there are none. There is nothing significant. I can think of no references at all to integrated audit or community budgeting approaches and so on. The Bill is very limited in its view of the world of audit. It is very much focused on the relevant authorities—the unit of audit—and will lead to an atomised approach, rather than a connected view of how audits should be undertaken in the new world of public service delivery.

The legislation is backward-looking. It has completely failed to make provision for auditing in the new world being built before our very eyes. My right hon. Friend the Member for Leeds Central rightly said on Second Reading that that is an astonishing omission. The Government have introduced community budgeting pilots; they have taken forward the good work of the previous Government on troubled families; and in the area of universal credit, they are looking at connected spending, so it is astonishing that the world of audit envisaged by the Bill will take no account of that at all. The Government have simply not provided for the changing world in which public services are managed and provided.

We not only have community budgets but city deals, which the Government have championed around the country, and they have my support, but city deals should be properly audited. Combined authorities are part of the shift towards stronger working between relevant authorities, and indeed between local and central Government. As community budgets develop, will the Minister acknowledge that different auditors will examine the use of the local government pound while the NAO examines the use of the Whitehall pound, although they are actually spent together? That does not make sense, but that is what will happen under the Bill as it stands. If the service is shared and common, the audit should be, too. A submission to the draft Local Audit Bill Committee stated:

“We see a real opportunity here to develop value for money examinations which provide a ‘whole system’ view, taking in both the national and the local perspective, and therefore consider that this is an important part of the draft Bill... Parliament has a legitimate interest in how resources passed down to local bodies are used, and how local bodies contribute to the achievement of national policy objectives.”

I agree with that to some extent, although, as a localist, I would not want to see the measures in the Bill, and certainly those that we have proposed, being used too strongly to replicate the levers from the centre to influence local decision making. Nevertheless, Parliament has an interest in seeing that public money is used well, whether it is national or local spend.

Parliament previously drew some assurance from the national value for money work carried by the Audit Commission, but that work is winding down and the VFM assurances offered in the Bill are limited. We believe that the National Audit Office can help to provide—excuse the jargon, but it was used in the draft Bill Committee—an end to end picture, and I think we all know what is meant by that. For example, it could include work on universal credit or on adult social care, where local authorities are increasingly taking a much stronger role at a local level, and we would all support that.

We need to see the future of the health service as one in which we meet the challenges of a rising elderly population, with people living longer, but hopefully with greater independence. Local authorities have a critical role, but it will require us to end the notion that there is something quite separate called the national health service and something called social care that is provided by local authorities. We then need to audit how effectively the money is spent jointly. Some of it is held jointly—for example, through health and wellbeing boards. All around the country there are all sorts of shared services arrangements between local authorities, health bodies and other parts of the health and social care system—for example, clinical commissioning groups—where the spend is effectively managed jointly, and the audit should follow that.

The matter becomes increasingly relevant as Government policy cuts across departmental silos, fresh patterns of local delivery develop and local authorities commission services from and develop partnerships with a diverse range of providers. The ad hoc Committee was absolutely right to state that the Bill

“should provide an unambiguous basis for this type of insight” into spend across local and central Government.

I hope that the Minister will accept amendment 73. I am sure that he agrees with the spirit in which it is intended. Although I acknowledge that it creates a challenge about how to give it effect in the Bill, he will have seen that we have tabled a series of amendments that would produce more connected or integrated audit.

I will be interested to hear how the Minister envisages auditing in the new world of public service delivery. For example, would it not be sensible for the management of audit contracts if two authorities working together substantially and significantly—that may need to be defined in the Bill—could appoint a lead auditor to audit a particular set of services, rather than have two auditors crawl over the same books and duplicate how they look at the same services, perhaps reaching different conclusions? We would rather that such auditors worked together to reach a shared view about whether those services were value for money and whether public money was spent effectively. An audit presented to the relevant authority would contain sections that had been prepared jointly and appropriately with other auditors of local spend, perhaps from other relevant authorities, or with the National Audit Office.

In my area, there are significant questions about whether the huge shared services arrangement between Northamptonshire and Cambridgeshire county councils genuinely delivers value for money. I am concerned that audits in which relevant authorities are responsible in a separate and fragmented way for their own audits—that is how the system is currently envisaged—will not truly  reveal whether the public spend across two big county councils with a huge shared services deal is effective.

Will the Minister comment on city regions? I hope that he will reflect on the opportunity to audit the efforts of local enterprise partnerships through the approach covered by amendment 73, or by agreeing to our amendments to name them as relevant authorities. If they are not so named, this approach would be particularly relevant to new arrangements for bringing together spend. I hope that he will support the amendment or assure us that, at some later point, we will be able to take account of the new world in which local public services are delivered.