Clause 5 - Modification of Act in relation to smaller authorities

Part of Local Audit and AccountabilityBill [Lords] – in a Public Bill Committee at 3:30 pm on 5th November 2013.

Alert me about debates like this

Photo of Brandon Lewis Brandon Lewis The Parliamentary Under-Secretary for Communities and Local Government 3:30 pm, 5th November 2013

I will try to make sure that I deal with all those points.

As Baroness Hanham said in the other place, in the command paper of 2012 that accompanied the draft Bill we committed to review the £25,000 threshold with a view to whether we potentially need to raise it in future. That was partly for the reasons the hon. Member for Corby laid out, and I understand the points he has raised. It is right that the threshold can be reviewed, and we are happy to make that commitment. There are a number of parish councils in my constituency, all of which work—as I am sure the hon. Gentleman knows that many do—on that much smaller scale where a parish clerk may get only a few thousand pounds. Where to draw the line is an issue, and that is why we think it is right that it is reviewed.

To deal with the hon. Gentleman’s query about the numbers, setting a threshold at £25,000 would remove about 6,400 or 64% of smaller authorities from the requirement to have an external audit. For hon. Members who have rightly raised issues about ensuring that public money is well covered and audited, it is worth noting that such authorities are responsible for just 7% of the total money within the smaller authority sector. On his query about smaller authorities, all parish and town councils are defined as smaller authorities—in other words, all those under £6.5 million.

I will turn to limits and insurance in a moment. In relation to financial safeguards for parish and town councils, we will give auditors the discretion not to consider an objection if they think it is frivolous and  vexatious, if it repeats an objection that has already been considered or if the cost of the auditor’s investigation would be disproportionate to the financial amount that the objection involves.

We are working with the National Association of Local Councils, but it is still possible for the Secretary of State to appoint one sector-led body, whether it is the Local Government Association or any other single sector-led body to administer both parts, but the contracts are different, because smaller authorities obviously have less onerous systems, as has been outlined.

Amendment 87 would remove subsection (4)(c), which explains that regulations for smaller authorities may include provision for them to pay into a fund to cover auditors’ costs in specified circumstances. The provision has been included at the request of the smaller authorities sector. The proposed fund would be administered by the sector-led body, and would be available to authorities that opted into its appointment regime. The provision is necessary as many parishes and other smaller authorities cannot currently make such payments, because they are not covered by the general power of competence. We understand that the purpose of such a fund could be to indemnify auditors against costs incurred in legal proceedings relating to the exercise of their statutory powers. It would be for the sector-led body to choose whether to create such a fund. We will consult in 2014 on any draft regulations about the fund, and those regulations will be subject to the affirmative procedure. With those reassurances, I hope that hon. Gentleman will not press amendment 87.