Statistics and Registration Service Bill

As we have heard, Amendment No. 169 would require the board to establish a committee consisting of non-executive members of the board, to keep under review whether the board’s internal financial controls secure the proper conduct of its financial affairs. Amendment No. 117 would ensure that the board’s annual report included a report of the work of the committee. The Government believe that corporate governance is of fundamental importance. Good corporate governance includes embedding effective risk management at all levels of the management of government organisations, increasing the need for explicit assurance about risk, control and governance in organisations. As the noble Baroness knows, the work of audit committees is a key part of that. To promote good practice across government,the Treasury publishes Corporate Governance in Central Government Departments: Code of Good Practice. The code contains as one of its basic principles that, "““the board should ensure that effective arrangements are in place to provide assurance on risk management, governance and internal control. In this respect, the board should be independently advised by an audit committee chaired by an independent non-executive member””." The corporate governance code also sets out that audit committees should be established by and function in accordance with the Audit Committee Handbook, another Treasury publication. Clause 32 empowers the board to establish committees to exercise its functions, give it advice, and support it in transacting its business. However, rightly, it does not specify the names and functions of specific committees that must be established. The Government fully expect that the board will use that power to establish an independent and objective audit committee, chaired by an independent non-executive member, as set out in the code on corporate governance and following the guidance set out in the Audit Committee Handbook. In addition, the Government expect Parliament to play the central role in holding the statistical system to account. There will be full accountability to Parliament as much for this aspect of the board’s work as for others. For example, in the extremely unlikely event that the board failed to establish an audit committee, I have no doubt that that would be a matter of fundamental concern to Parliament and it would call the board to account for that failure. In those circumstances, we do not think it necessary to legislate for an audit committee. It is for the independent board to determine how it sets up its committees, including the details of their membership, and it is not appropriate to stipulate so much detail in the Bill. The board will be expected to follow best practice guidance, but it would not be appropriate to put that in legislation. As I have said in previous debates, we do not think it necessary to stipulate the contents of the board’s annual report. Clause 25 already requires the board’s annual report to cover what it has done and what it has found each year, and within that remit, we think we should allow the board to use its own judgment, following good practice guidance, to ensure that the most pertinent information about its activities are reported each year. I hope my explanation is satisfactory to the noble Baroness.