As a general matter of principle, I am happy to meet anybody who wants to talk about any part of my brief. I obviously extend that invitation to Transparency International UK.
On the fairness of council tax referendums, my hon. Friend the Member for Mid Dorset and North Poole rightly outlined the anger of some areas and residents when they are faced with claims of a council tax freeze but receive spiralling bills from their authority. Clause 39 specifically addresses that—it ensures that claims of a freeze are based on the bill that hits doormats rather than any half-measures.
My hon. Friend the Member for Meon Valley (George Hollingbery), who has a background in local government, spoke of his wide experience of comprehensive area assessments and gave a great outline of exactly why we need a firm ending of the Audit Commission, so there is no chance of it coming back in the format we have experienced. He touched on auditor appointments, on enforcing the publicity code, which I will deal with later, and on council tax referendums and levying bodies. He suggested a range of interesting opportunities to ensure that referendums are dealt with in a proper and fair manner for the authorities. I look forward to taking his suggestions forward in Committee.
Let me be clear why the Government have decided to proceed with the final abolition of the Audit Commission. The House has heard how our reforms to local audit will result in a more efficient audit system, with an estimated £1.2 billion of savings—I would not want to disappoint the hon. Member for Corby by not mentioning the £1.2 billion of savings. That is exactly why it is important to push forward and embed that to stop any chance of future Audit Commission mission creep.
The reforms are not just about saving money. They are about the Government’s drive to decentralise power and responsibility to local bodies, and giving local people better tools to hold bodies to account. By cutting out the middleman, local bodies will no longer be forced to foot the bill for Audit Commission costs. They will know exactly what they are paying for in their audits. Local bodies will be required to publish information about their auditor appointments and any public interest reports they receive from the auditor. People will therefore be able to find that information locally, rather than having to go to a remote central body.
The reforms improve local accountability. As many hon. Members, including Opposition Members, have said, the Audit Commission had lost its way, forcing councils to focus on Audit Commission priorities rather than priorities that matter to local residents. My hon. Friend the Member for Meon Valley outlined some of those. As a councillor, I remember sitting in meetings when officers told us what we should do—it was often to do with waste collection. The suggestions were not made because they were right for our residents, but because they ticked a box to please the Audit Commission, and the Government would punish us further down the line if we did not take that action. The Government’s impact assessment estimates that the cost to local authorities of complying with the CAA was around £25 million per year—that money could be better spent on other things that residents want and need and deserve to have delivered.
Let me reassure hon. Members who are concerned that the quality of audit will suffer. The Government are committed to ensuring that that does not happen. Private audit firms have long had a role to play in auditing public bodies. As I have said, the Audit Commission has contracted out some 30% of its audit
contracts to private audit firms. Last year’s outsourcing exercise demonstrated that public audit can be carried out to the same high level but at a much lower cost to the taxpayer.
The Bill contains robust mechanisms to safeguard auditor independence. The work of the auditors remains largely unchanged and auditors will still be required to use their professional judgment to decide whether to make a report in the public interest if they believe something is amiss. To enshrine that important principle, the Bill allows auditors to recover costs for their time in making a public interest report or advisory notice. By amending existing secondary legislation, we will ensure that whistleblowers can make disclosures to local auditors directly or to the National Audit Office.
Many hon. Members have mentioned the publicity code. I want to make one point clearly at the outset: there is no change to the code. The measures contribute to the Government’s commitment to localism rather than run counter it. Given that the code is not changing, I am somewhat surprised that any hon. Member has a problem with it being put into statutory form. Opposition Members have complained that the Government have not enforced the voluntary code. By putting it in statute, we can make sure that it is enforced to ensure that taxpayers’ money is spent appropriately and properly, and not for political ends.
There have been exaggerated claims that provisions on the code will lead to central Government clamping down on, for instance, HS2 campaigning, which has been mentioned. That is nonsense. Councillors are free to campaign on behalf of their constituents. Indeed, the Government legislated in the Localism Act 2011 to give councillors the freedom to campaign. If any challenge is balanced and factually accurate, it will not contravene the code, unlike some publications. For example, Nottingham city council’s website seems unusually to mirror the Nottingham Labour party’s website. Residents might want to question expenditure on that sort of thing. If anything, the publicity code defends council communications from political interference and propaganda-pushing, as was outlined by my hon. Friend the Member for Bromley and Chislehurst, who gave a range of examples.
The Government have no intention of monitoring or censoring communications, but it is right for us to act when concerns are expressed that local authorities are in breach of a code approved by Parliament. It is certainly right to act when authorities use taxpayers’ money to fund publicity for political purposes.