My Lords, I fully agree with your Lordships on the need for the CAA to be efficient in carrying out its functions, and I welcome the points made in the debate to provide for auditing of the CAA. However, I am still not able to support the amendment or its principle.
Noble Lords will recall that very similar amendments to Amendment 61 were tabled in the other place both in Committee and on Report and also in this place in Grand Committee. As I explained in Grand Committee, the Government would look to those proposing to reinstate the role of the Comptroller and Auditor-General to provide compelling reasons why NAO scrutiny of the CAA would deliver a different result from its current mechanisms. In the absence of such a justification, and having considered this issue further myself, I remain unconvinced that there are compelling reasons to believe that NAO scrutiny of the CAA would deliver a different and better result than the Government’s current and proposed mechanisms for the audit and scrutiny of the CAA.
The CAA is already under a duty to keep proper accounts and records in relation to the accounts and to make an annual report to the Secretary of State on the performance of its functions in that year. Copies of the accounts, the annual report and any report made by auditors are laid in each House of Parliament by the Secretary of State. Section 15 of the Civil Aviation Act 1982 already provides that the Secretary of State will appoint the auditors. The Government have tabled an amendment to the Bill that will provide for better transparency of the CAA’s efficiency measures and for better accountability for those measures, and we will debate this shortly as Amendment 62.
That amendment will provide for increased transparency of the CAA’s action to improve its efficiency by, first, requiring that the CAA includes in its annual report a statement about efficiency in the performance of its functions; secondly, providing a specific power for the Secretary of State to give directions about matters that must be covered in that efficiency statement; thirdly, requiring that the auditors, appointed by the Secretary of State pursuant to Section 15 of the Civil Aviation Act 1982, produce an assessment of the efficiency statement; and, fourthly, providing that the CAA’s annual report includes the auditors’ assessment of the CAA’s efficiency statement in respect of that accounting year. These are sufficient to give the CAA a strong incentive to secure value for money and to be as efficient as possible in performing its functions. I take it that the noble Lord is worried about the CAA’s efficiency and proper performance of its functions rather than that it properly accounts for expenditure.
Furthermore, it is not appropriate for the CAA to be audited by the NAO. First, NAO audits are usually of bodies whose income is largely from public sources, whereas only 4% of the CAA’s income comes from
those sources. Secondly, one consequence of an NAO audit role would be that the CAA’s auditors would no longer be appointed following a competitive tendering process. This would remove efficiencies made possible by the tendering process that would precede any appointment of auditors for the CAA by the Secretary of State. Thirdly, the independent review of the CAA by Sir Joseph Pilling, published in 2008, considered the need for an NAO role and rejected it. The recommendation was subsequently accepted by Ministers under the previous Government, and I have yet to see convincing reasons why they were wrong.
Representatives of airlines have suggested to us that the benefit of an NAO role lies more in the value-for-money audits that the NAO would be able to carry out than in the audit of the CAA’s accounts. In that respect, I remind your Lordships that such NAO reviews typically occur on a cycle of five or so years. However, the efficiency statement and report that are now under consideration would be annual.
In conclusion, while the Comptroller and Auditor-General and his staff at the NAO do a highly effective job, I am not persuaded that it is necessary to bring the CAA within their remit. I therefore see no reasons at the current time why the NAO should audit the CAA. I ask that the amendment be withdrawn, and we should look forward to debating my Amendment 62.