Constitutional Reform and Governance Bill

Perhaps I can explain how the National Audit Office will work as a corporate entity. As such, it will be constituted as a board comprising five non-executive members, including its chair, and four executive members, including the Comptroller and Auditor General, who will also be its chief executive. The board's role, in essence, will be to develop a strategy for the office as a whole, not a strategy for audit judgments or to tell the CAG what to investigate: that is absolutely clear. The board's role will be to secure funding for the Public Accounts Commission, to monitor the delivery of the overall strategy and to report publicly on what is being achieved. As I have already said—but it is worth putting it on the record because Professor Heald has made these comments—the CAG's statutory audit responsibilities are completely ring-fenced; they are not transferred to the board. The board has nothing to say about or to do with his statutory audit functions. The Bill will merely ensure that in future these activities are carried out within the governance of the NAO as a whole, as a modern and robust organisation. The relationship with the CAG and the board will be regulated by code, which, under the terms of the Bill, will be approved by the Public Accounts Commission. I believe that the CAG—this is what he has told me—will benefit from the engagement of non-executives. Indeed, in so far as has been possible, the CAG has started to operate the new arrangements on a voluntary basis. The non-executives have already been appointed, and I understand from the CAG that they have already made a helpful contribution to the development of the strategy. In relation to the establishment of the NAO as a corporate entity, I am satisfied that sufficient safeguards are in place to reconcile sound governance with audit independence. I want to put on the record an important point made by Professor Heald. Let us think of the fantastical notion that the Government might put some sort of pressure on the chairman of the board to circumscribe the independence of the CAG. That is extremely unlikely. However, even if the Government attempted it, and even if the chairman listened to their advice, which is also extremely unlikely—why should he?—the CAG could ignore it. I do not know where Professor Heald is coming from. Even if there were a problem, the CAG would have the right of access straight to the commission. We are not circumventing the commission's powers. It, not the Government, sets the budget of the NAO. Say the CAG were to make critical remarks about the Government. Would the Government have any say over the budget of the NAO? No. Uniquely for a Government body, its budget is set by an independent Committee of this House, the Public Accounts Commission, which by the way is not the client of the NAO. The client of the NAO is the Public Accounts Committee, and that is why the commission sets the budget. I am afraid that I have to put it on record—it is very important—that Professor Heald is wrong. We are not in any way circumscribing the independence of the CAG, and I am glad that we have had this debate so that we can put that on the record.