I was delighted to hear my right hon. Friend the Secretary of State finish an important piece of work to which we committed ourselves when we first came into government. I was intrigued to listen to the right hon. Member for Leeds Central (Hilary Benn), the shadow Secretary of State. It was a curate’s egg performance. I grant that there were some near rib-tickling moments—some of which were probably not intended—but it was a classic case of an Opposition searching for something to oppose. My right hon. Friend has introduced and delivered a Bill that the Government said at the very beginning of the coalition we would introduce. I am delighted that it has come to fruition.
Let me deal with the various parts of the Bill. I was fascinated to see some of the Audit Commission’s expenditure when I was part of the Opposition Front-Bench team. In the climate of the 1980s, there was an argument for considering a body such as the Audit Commission. However, two things happened: the Labour Government caused massive mission creep in the Audit Commission, and the climate changed. What caused the massive mission creep? Effectively, the Audit Commission was used as the machine for imposing a centralised performance regime on local government. That was a distinctly and fundamentally un-localist thing to do.
The situation is well described by Professor George Jones of the London School of Economics, whom many hon. Members will know—he is the biographer of Herbert Morrison. Professor Jones would not regard himself as a natural admirer and advocate of the coalition Government’s policies, but he believes in local independence. I disagree with many of the things he says, but he has described the Labour Government as taking “a fateful decision” that
“turned the Audit Commission in effect into an agent of central government…[It] marked the end of its independence, which was confirmed as further tasks required by central government were placed on the Commission: inspecting local authorities’ performance, judging and scoring them.”
Professor Jones is one of the leading independent academics. Most people would say he has a left-of-centre viewpoint—he happens not to be a member of any political party—but that significant academic is condemning the actions of a Government of whom the right hon. Member for Leeds Central was a member. It is therefore a bit rich of him to accuse the Secretary of State of back-door localism. Anyone who knows my right hon. Friend and the history will know that that is nonsense.
The Audit Commission grew beyond its remit to such an extent that it became the elephant in the room in a great deal of local government budgeting. Increasingly, time and again, local authorities—officers and members—felt themselves to be more constrained. They felt they had to play the system and adopt policies and priorities that ticked the box of Audit Commission approval. The system of reward and funding was such that they were incentivised to tick the box to meet central Government objectives rather than those of their council tax payers.
That was initially swept away when the coalition Government got rid of the iniquitous comprehensive area assessments regime, which, at that time, was a huge amount of the Audit Commission’s work. Essentially, the core audit function was left. As I recall, by that stage, the Audit Commission was about the fourth
largest audit practice in the country. There was no logical reason why such a large audit practice should not operate in a commercial environment, providing that a proper statutory regime was in place to overarch it and that there was a proper regulation and performance regime, which the Bill introduces.
We saw that when the in-house audit practice was successfully floated in the private sector. It is worth noting that, as a consequence, there has been a 40% reduction in audit fees paid by local authorities. By the time the Bill is implemented and the Audit Commission is finally abolished, there will be a 50% reduction in those bills. That has got to be a good and thoroughly localist thing. Those of us experienced in local government will remember regular complaints about the level of charging by the Audit Commission. There was also the iniquitous situation of its top-slicing, whether it did the job in-house or it was done through private sector contractors, which was clearly unjustifiable. I hope people accept that the Bill recognises a sensible reality.
I have to say with a smile that I note the cost of trying to persuade the Opposition Front Bench team to change our minds was put at £56,000. They were getting my right hon. Friend the Secretary of State and I cheaply at that price. On the other hand, it did not have much effect, so perhaps they were had in any event. I assume that £50,000 was for my right hon. Friend and £6,000 was for me—I am fully aware of the status of these things—but it says something of the level of unreality in the Audit Commission. In the end, that is why it had so few friends in local government and why its departure will be unlamented. Instead, we have a sensible set of checks and balances which need to be put in place, and which I think the local government sector now understands.
It is also worth saying that performance management and improvement in the sector has matured—a point made in interventions on the right hon. Member for Leeds Central. There is a great willingness to collaborate and work closely together; that is a classic case of recognising that the game has moved on.
The Bill seeks to tackle the code of practice on publicity, which is significant. I was the Minister when we introduced the code and there had been a number of egregious examples of abuse by local authorities. East End Life is of course the example most regularly cited, but I am afraid there are others.