Lord Palmer of Childs Hill:
My Lords, I also must declare that I am a member of the Institute of Chartered Accountants in England and Wales. I am also chairman of a local authority audit committee at the London Borough of Barnet, and am a councillor in that borough. I also thank the Local Government Association for its very informative description of the various options available. I have been quite nervous about centralising the acquisition of external auditors. I feel that the role of the internal audits tends not to be recognised by external auditors who, from my research, seem to do a lot of substantive work which in many ways shows that they are not relying on the work in internal audit that the local authorities are paying for. That is what is happening at the moment.
As much as I would like there to be local acquisition of external auditors, I am happy to go along with making this option available. I believe that the way that the centralised body performs will depend on how the local authorities react and whether they are getting a good deal. I also believe that the wording in the amendment is right. The danger of not permitting this centralised option is that local authorities, and the auditors themselves, will cherry pick the audits they want, and that the local authorities will cherry pick the auditors they want. That arrangement could be too cosy. This issue arises and has become imperative because of the ending of the Audit Commission. We are examining what can be done due to that change in circumstances. The comment about taking out only one or two words was absolutely right. Without removing the word “authority”, Amendment 1 will not carry the same weight. From our Benches I support both amendments in this group.
3.45 pm