Clause 11 - Relationship with relevant authority

Local Audit and Accountability Bill [Lords] – in a Public Bill Committee at 3:30 pm on 7th November 2013.

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Photo of Roberta Blackman-Woods Roberta Blackman-Woods Shadow Minister (Communities and Local Government) 3:30 pm, 7th November 2013

I beg to move amendment 114, in clause 11, page 8, line 23, leave out:

‘other than a health service body’.

I apologise to the Committee for taking us back to the thorny issue of why the Bill treats health service bodies differently from other authorities. It is extremely important that we pay attention to that in relation to clause 11. I am grateful to the Minister for sending round the consultation document on audit arrangements for NHS trusts and clinical commissioning groups. However, is it not a peculiar practice to have the Government rely in Committee on a set of arrangements that are open for consultation only now? Indeed, the Government propose that the consultation on audit committees for health service bodies will run until 31 December, so the consultation period probably will not finish before the Bill has passed through the House of Commons—it could be heading for Royal Assent. Surely that is worrying.

I want to be fair. I congratulate the Government on producing a consultation document; that would appear to be good practice. What is not good practice is publishing a consultation document about a year after it should have been published, because that will not help the Committee’s deliberations. The Government have form on that: we had four relevant consultations running through the passage of the Growth and Infrastructure Bill. I hoped that the Government would listen to the points made by the Opposition during the passage of that Bill as to how unhelpful it was to the Committee to have relevant consultations running at the same time as consideration in Committee. Clearly, they did not listen, because we are back in exactly the same situation again. That is not acceptable, because at this point we are unsure as to what the audit arrangements will be for NHS trusts and clinical commissioning groups or what might emerge from the consultation document. That presents us with a huge problem in the consideration of the clause.

Perhaps a greater problem is the lack of joined-up thinking demonstrated by the Government. They are often criticised for their lack of competence, and here is a good example of such incompetence. At a time when local authorities and health bodies are supposed to be working together to reach imaginative local solutions to the problems that they face, why are we not dealing with the audit arrangements for health bodies and local authorities in the same way? Lord True made that point eloquently during consideration of the Bill in the other place. He noted, as do we:

“On local audit and accountability, this Bill goes wider than just local authorities,”—[Official Report, House of Lords, 22 May 2013; Vol. 745, c. 911.]

We know that from the long list of bodies in schedule 2. Irksomely, the Bill includes some NHS bodies but not others in what appears to be an inconsistent and illogical manner. Sometimes NHS bodies are included and sometimes they are excluded. Sometimes some consideration is given to them, but at other times no mention is made of them at all. It is not good enough for the Minister to say, as he did on Tuesday, that the reason for excluding NHS bodies from time to time is that audit arrangements already exist for the NHS.

The point we are making is that the way in which the Bill has been constructed means that an opportunity is missed, as Lord True said, to give local authorities a more constructive role in securing effective audits and accountability of public bodies operating in their area. It also misses the opportunity to streamline audit arrangements for health and local authority bodies. The introduction of common arrangements for audit would surely help the integration of health and social care services, which the Government claim to promote, but the Bill does not mention that. We note that the Government have moved towards integration by placing public health responsibilities in local authorities, so it is even more peculiar that audit arrangements for health and local authority services remain separate.

The panoply of health arrangements as experienced locally is causing a great deal of confusion. Health services are commissioned by four different commissioning groups: local authorities, NHS England in whatever local structures it adopts, local clinical commissioning groups and the national commissioning group. So much for the Health and Social Care Act 2012 simplifying arrangements on the ground. The point that I am making is that all those different organisations, and the local authorities with which they engage, have different audit arrangements, which is surely a recipe for disaster. At best, it will cause massive confusion locally.

That is especially the case when we look at what is happening on the ground with some local NHS bodies. Their budgets are coming under severe strain. In the next year, my clinical commissioning group is due to lose £17 million, and the north-east as a whole will lose £230 million. Those are huge sums of money, and the question of how money is spent will become even more important. Lord True is also right to point out that if local audit and accountability of the NHS and other local bodies that affect local communities is to have any meaning, there must be a place for public scrutiny.

Local authorities have an obvious role, and it is not clear that the Government have set out anywhere else the role of the public in scrutinising health bodies locally. Indeed, Lord True described in the other place a situation that many of us are already seeing locally: the world of health and local government is rapidly changing. In some areas, clinical commissioning groups and foundation trusts are already establishing integrated community organisations to carry out their commissioning roles, either in an advisory capacity or through some other set of arrangements. He made the very point with which the Minister so incredibly failed to engage on Tuesday.

We have the very odd situation where one strand of law is semi-engaged in the Bill and derives from the National Health Service Act 2006 as amended in 2012 and a whole other strand of local authority-related legislation concerns audit and accountability. Crucially, the Bill misses the opportunity to bring those strands together in one coherent whole of local audit of health and local authority bodies. Indeed, I thought that Lord True put it well. He said that as the two empires come together, their audit worlds should come together. The Minister must answer why the Government have not listened to Lord True and done just that. The legislation  does not address how public accountability can be built into the auditing of the new local health structures or into the extension of local authorities’ role in scrutinising local health bodies.

To conclude, I have a couple of questions for the Minister. Why has he not allowed for the fact that local health bodies and local authorities could share common audit arrangements? Will he speak specifically about the point that Baroness Hanham raised in the other place? In answer to the questioning of Lord True, she indicated that the Government would produce updated guidance on audit arrangements for local health bodies. Has that guidance been produced and, if so, where is it to be found?

Photo of Brandon Lewis Brandon Lewis The Parliamentary Under-Secretary for Communities and Local Government

The amendment would duplicate the existing requirement for health service bodies to supply information to the audit committee when acting as an independent auditor panel. Clause 11 gives auditor panels the power to acquire documents or information held by the authority. Audit committees are integral to the governance arrangements of health service bodies and perform a key role in supporting the board and accounting officer, by reviewing the comprehensiveness and reliability of assurances on governance, risk management, the controlled environment and the integrity of financial statements and annual report.

Any non-compliance with the requirement on the health service body to supply information to the audit committee when it is acting as an auditor panel will be highlighted in the annual audited governance statement of the body, which will be published as part of the annual report and accounts. The Government want to secure greater integration of health care services and greater integration between health and social care services, where that would improve quality or reduce inequalities.

I need to make clear the Government’s position. The focus is on services as they are provided to patients, not on the bodies that provide them. That is why we do not see the fact that bodies might have different auditors as hindering the drive for the better integration of services. That is perhaps the difference between the two sides of the Committee. We are interested in the service and what the patient sees, rather than being too caught up in the structure behind it when it is already covered by auditors. In many cases, clauses in the Bill specifically exclude health service bodies. To be clear, that is a consequence of the way in which the Bill is drafted and reflects the different accountability arrangements between health service bodies and local authorities.

Local auditors of health service bodies, for example, are already required to report unlawful expenditure to NHS England, the NHS Trust Development Authority, clinical commissioning groups or NHS trusts and to the Secretary of State. Conversely, local authorities are accountable to the local electorate; consequently, the auditor has more direct access to the records of local authorities and needs to have powers to refer matters to the courts, as the Secretary of State does not have powers to direct local authorities. Similar provision is made for health service bodies, but in different clauses or schedules.

Photo of Chris Williamson Chris Williamson Labour, Derby North 3:45 pm, 7th November 2013

For the record, I want to make it clear that both Government and Opposition Members are concerned—certainly we are—about the quality and delivery of service to the public on the ground. I am interested, however, in whether the Minister agrees with me that getting the audit arrangements right has a bearing on the front-line services to the general public. Surely the two cannot be divorced from one another.

Photo of Brandon Lewis Brandon Lewis The Parliamentary Under-Secretary for Communities and Local Government

I am not sure that many patients served by their doctors or nurses understand how that doctor service changes according to how the audit is set up—whether it is audited by a local authority auditor or the NHS auditor. The Bill recognises the difference in how the NHS and local government are dealt with.

On Lord True’s amendments in the Lords and the commitments made to him in the other place, the Department of Health expects to publish guidance shortly on the health scrutiny regulations. The Department has worked with Lord True to develop the guidance.

I have nothing against the principle of the amendment, but simply do not think that it is necessary. With that clarification, I hope the hon. Lady will feel able to withdraw the amendment.

Photo of Roberta Blackman-Woods Roberta Blackman-Woods Shadow Minister (Communities and Local Government)

I am grateful to the Minister for his response and for his direct answer to my question about the guidance. I suspect that, as with many other areas of the Bill, we will have to wait to see what the guidance is like when it is produced and whether it answers our specific questions. However, I am more worried now about the way in which NHS bodies are being treated than I was before the Minister’s comments. I simply do not feel that the Committee was given an explanation as to why local health bodies audit arrangements should be any different from those for local authorities, or indeed why local authorities in their audit arrangements are not given a much greater role in scrutinising what is happening in local health bodies.

Photo of Brandon Lewis Brandon Lewis The Parliamentary Under-Secretary for Communities and Local Government

Does the hon. Lady not appreciate the difference in the governance structures and the way in which those structures feed through the system between the NHS and local authorities?

Photo of Roberta Blackman-Woods Roberta Blackman-Woods Shadow Minister (Communities and Local Government)

I assure the Minister that I do understand the difference in the governance arrangements. Indeed, I thought that I had demonstrated that to the Committee by outlining some of the complexities in the particular structures that are now operating locally and how complicated the new world of health is. It is particularly difficult for local people to get their head around who is commissioning what, for whom and where they should check how money is being spent. It is the lack of clarity in the Bill about how local bodies should account to their local communities that so worries us.

I noted what the Minister said. He said that health bodies account to NHS England and the Secretary of State. We know that that is the current state of play, but, as the Department of Health has commenced a consultation exercise on its audit arrangements, it would surely not have been beyond the ability of the communities and health ministerial teams to have got together to create a set of scrutiny and audit arrangements for local health  and local authorities that would have made sense to local communities as well as accounting for the money received from the Department of Health.

Photo of Neil Carmichael Neil Carmichael Conservative, Stroud

I have been listening carefully to the shadow Minister. Does she agree that the thrust of her comments, if realised, would somewhat collide with the role of Monitor and other structures in the NHS?

Photo of Roberta Blackman-Woods Roberta Blackman-Woods Shadow Minister (Communities and Local Government)

The hon. Gentleman will forgive me if I do not go down that route. Monitor has a particular role to play in examining whether foundation trusts and other health organisations are delivering a degree of value for money and doing what they should be doing. The hon. Gentleman has again identified a difference between the two sides of the Committee. The Opposition are not saying that audit arrangements are not in place for health bodies. Such arrangements clearly are in place and I have mentioned the legislation that covers it—the NHS Act 2006, as amended by the Health and Social Care Act 2012. Our point is that, given that we all want to see greater integration of local authority services and health services, it would be much better if some combined audit arrangements were in place, or, at least, that the two sets of bodies talk to each other and are both outward-facing to the local community—that is critical—so that local people can have a better understanding of what local health services and local  authority services are being delivered, which is what the Bill seeks to achieve. It is that missed opportunity that we are raising.

I am not sure we have heard the detail that we would have liked from the Minister about why the Government have missed that opportunity and why, given the various comments from Government Members in the other place, no action has been taken to rectify such a huge omission. Although I will withdraw the amendment for the time being, we will return to the issue on Report. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Amendment made: 17, in clause 11, page 8, line 41, at end insert—

‘(8) The auditor panel of a parish meeting may only exercise the function in subsection (2) in relation to the chairman of the parish meeting or the proper officer of the district council within whose area the parish lies.’.—(Brandon Lewis.)

Photo of Claire Perry Claire Perry Assistant Whip (HM Treasury)

May I beg to move that the Committee be now adjourned?

Photo of Edward Leigh Edward Leigh Chair, Public Accounts Commission, Chair, Public Accounts Commission

You may. My co-Chair will be looking after you next week, so I will not have to look at Mr Carmichael’s colourful tie any more.

Ordered, That further consideration be now adjourned. —(Claire Perry.)

Adjourned till Tuesday 12 November at five minutes to Nine o’clock.