My hon. Friend made a very interesting speech and I hope that he will follow the passage of the Bill closely. I will have to give further thought to the implications of his suggestion, but if the arrangements proposed by the Government are to work, there must be an open market and a wide range of audit firms must provide audit services. We would also want that to be reviewed regularly by the audit panel. The points that the hon. Member for Meon Valley made about the dismissal of auditors were important.
Steve Parkinson of the Society of Local Council Clerks said:
“When we get to the 2017 tender exercise, I cannot imagine those fees going down, and especially for the smallest, I can see them needing to go up.”
That speaks to the point made by my hon. Friend the Member for Derby North about what lies ahead. What assurance can the Minister give that the new audit arrangements will not lead to rising costs, rather than savings, for some councils?
On savings, it is welcome that, after Labour pressure in the Lords, the Government undertook to look sympathetically at a proposal for an optional joint procurement body. We welcome the assurances that the Secretary of State has given today and we look forward to seeing those proposals. Central procurement could save more than £205 million of public money over five years. That figure does not come just from the Audit Commission, but is supported by the LGA. Will the Minister assure us that he will bring forward detailed proposals on joint procurement as soon as possible? We hope to have them by this Thursday evening so that we can give them full and constructive consideration in Committee.
Joint procurement arrangements might address some of the concerns about the practicalities of requiring all councils to have auditor panels with independent members. As my right hon. Friend the Member for Leeds Central said, the Secretary of State considers himself to be a revolutionary, so he must be disappointed to be associated with arrangements that everyone but him sees as overly bureaucratic.
We will table amendments in Committee on the overlap between the new audit panels and the audit committees that most councils already have. My hon. Friend the Member for Hayes and Harlington (John McDonnell) suggested that all councils should be required to have an audit committee. Most councils have one already, but we should consider his suggestion further in Committee. We will also raise the practicalities of recruiting sufficient independent and appropriately qualified members for the audit committees, which were referred to by the hon. Member for Mid Dorset and North Poole. What evidence does the Minister have that there are people who are willing and able to take on that important role?
In Committee, we will also explore the removal of auditors and the purposes for which data matching can be used. As the Bill stands, those purposes do not include the prevention and detection of maladministration and error, as my hon. Friend the Member for Hayes and Harlington pointed out. We want to see that included in the Bill. We also want auditors to be covered by the Freedom of Information Act and will table amendments to that effect.
Does the Minister understand the concern that whistleblowers might feel uncomfortable approaching a private auditor that is employed by a local body or council? That is why we will propose that the audit committee should be named as a prescribed person in the Bill. I do not understand why the Government have resisted that. Perhaps the Minister will enlighten us.
My hon. Friend the Member for Hayes and Harlington highlighted concerns about corruption. I have read the important report that he mentioned. It is important that the new audit arrangements maintain independence, encourage probity, make appropriate provision for whistleblowers and ensure that it is possible to compare the relative performance of different authorities. He made wider points that we should explore further, including on the openness of council meetings, the use of commercial confidentiality and the role of scrutiny.
Perhaps the biggest disappointment with the Bill, as my right hon. Friend the Member for Leeds Central and my hon. Friend the Member for Derby North said, is that the proposed audit arrangements do not provide for the changing way in which public services are being managed and provided. The proposed arrangements require each local authority and other local bodies and public sector bodies to conduct separate audits. However, shared services, community budgets and combined authorities all demonstrate that there is a shift towards much stronger partnership working by local authorities, including with Government Departments. It is therefore a missed opportunity that the Bill focuses too narrowly on individual local authorities, rather than on arrangements that would enable auditors to follow the public pound through the system.
Many hon. Members have spoken about the provisions on local authority publicity. We support the code of recommended practice on local authority publicity and believe that it is broadly sensible. However, as my right hon. Friend the Member for Leeds Central said, there is no evidence to suggest that there are widespread breaches. No hon. Member has provided clear evidence of that today. The Government have taken no action to date under the code. Why not?
Clause 38 will allow the Secretary of State to issue a direction regardless of whether or not he thinks the authority is complying with the code. That is an extraordinary power grab that is worthy of the worst form of authoritarian government. The hon. Member for Bromley and Chislehurst revealed the true purpose of it. In seeking to support the Government, he listed a range of council publications, but gave no examples of where they had breached the code. The only common factor between the publications was that they were all from Labour-led councils. I know that in his heart he is a localist, as am I. Does he not agree that the way to deal with the problem is to fight the elections in those areas a little harder and to seek a Conservative majority, because it is clearly their political control that offends him, rather than the content of the magazines?
As for the wider controls on council publications, the Government suggest that local authority publications undermine the local press, but there is no evidence to prove that. Local papers are struggling for a variety of reasons. Indeed, as my hon. Friend the Member for Hayes and Harlington said, sometimes there is a welcome synergy between local newspapers and council papers. The Conservative-led LGA has complained, rightly, that the proposals are ill considered and not based on evidence or proper consultation—points echoed in the House of Lords by the Conservative peer Baroness Eaton, and the Liberal Democrat Lord Tope.
In my area, I have received many representations from residents in the smaller towns and villages of east Northamptonshire for whom the Nene Valley News—published, despite my best efforts, by the true blue local council—is a communications lifeline. Some residents of those villages feel so strongly about the issue that they tell me they will consider voting for me and my party for the first time because of the impact the measures will have on general well-being in those villages. That is surely not what the Secretary of State thought would follow from his nonsense claims about pocket Pravdas, which he cannot substantiate. We hope the
Government will see sense when we consider the Bill in Committee, and I hope we will have the support of the hon. Member for Mid Dorset and North Poole because, as she rightly said, this is using a sledgehammer to crack a nut.
When the Minister responds, will he say whether he accepts the comments made by his colleague, Baroness Eaton, a former leader of Bradford council, that the Bill centralises powers to the Secretary of State? Will he say how many local authorities in England publish magazines more than six times a year, and will he inform the House how many times the code of practice on local authority publicity has been breached? We are concerned that the third major area of the Bill on council tax referendums adds further uncertainty to council finances at a time when—as my hon. Friend the Member for Derby North said—councils face incredible challenges, and that that could lead to further reductions in essential local services.
Clause 39 means that councils may have to hold a referendum on council tax increases because of increases in levies due to agreements made in previous years or over which they have no control. As my right hon. Friend the Member for Leeds Central said, we are deeply concerned about the retrospective nature of those changes—a point pressed on the Minister by the hon. Member for Mid Dorset and North Poole in another sensible intervention.
A year ago the Government signed city deals to improve transport infrastructure and boost local growth by allowing specific transport authorities to raise money for specific schemes. A year on, that agreement is being torn up. That undermines confidence in the whole city deal process across government, and harms the certainty on which sound financial planning and private investment relies. In short, it is damaging for our cities and our economy. As the LGA said:
“There is a risk of perverse outcomes that will put growth generating investment at risk”.
That is absolutely right, and I hope the Minister will address that issue and think again.
There are other complications. Authorities have no powers to reject levies, yet they are obliged to hold referendums because of large levy rises imposed on them by other bodies. The actions of levying bodies could lead to council tax referendums in some authorities, but not in neighbouring authorities because some levying bodies cross local authority boundaries. I hope the Government recognise the serious problems with those proposals.
The Chartered Institute of Public Finance and Accountancy stated:
“The entire burden of any referendum is actually placed on major preceptors and billing authorities despite the fact that they have no ability either to directly influence the amount of individual levies or require a body to reduce its levy as a result of a referendum.”
Does the Minister accept that including levies in the amount used to trigger a council tax referendum will jeopardise the city deals his own Government have approved? If a council tax referendum is lost and the levying body refuses to reduce its levy, what does he expect a local authority to do?
Despite serious problems with the Bill, I will end on a positive note. The Government propose to introduce two new elements to the Bill: on parish polls and
transparency of council meetings. As the Minister would expect, the Government will have to answer the justifiable criticism—not least from our friends in the other place—that those proposals are being introduced rather late in the day and have not had the scrutiny given to the rest of the Bill. However, we support the intentions behind the proposals, and stand ready to play catch-up and assist with detailed scrutiny of those proposals in Committee. I sincerely welcome assurances that the Government will address the concerns raised by my right hon. Friend the Member for Leeds Central about combined authority boundaries. I hope we can do that through the Bill, but we welcome the assurance that another way will also be sought.
Finally, I thank the Minister for the helpful dialogue we have had since my appointment, particularly over the instruction to extend the scope of the Bill, and for the way he has facilitated contact with officials at his Department involved with the Bill. I hope that he is under no illusions about the many holes in the Bill, but also that he is in no doubt that the Opposition will approach Committee stage constructively.
7.24 pm