My Lords, this amendment addresses the question of the appointment of local auditors, covered by Clause 7. The procedure requires the local authority to appoint an auditor. Clause 7(2) provides that an auditor may be appointed,
“to audit its accounts for more than one financial year”.
Clause 7(2)(b) states that,
“the authority must make a further appointment of a local auditor at least once every 5 years”.
The amendment would remove the following subsection, which states that the paragraph to which I have just referred,
“does not prevent the relevant authority from re-appointing a local auditor”.
The object of my amendment is to ensure that there is a change after a five-year period. In my submission, it is possible for the auditor and the local authority to have too cosy a relationship. As I read it, there is nothing in the procedure for appointments set out in Clause 8 even for a tendering process to be entered into by the local authority, although I may be incorrect in that regard.
Clause 8 provides that:
“A relevant authority must consult and take into account the advice of its auditor panel on the selection and appointment of a local auditor”.
If a panel did not recommend a competitive tendering process, or even if it did, as long as the local authority had regard to that it would not necessarily follow that there would be such a process.
I agree that five years is a sensible sort of period for a firm to be engaged. However, it seems unfortunate, to put it mildly, that people could be reappointed for a substantial period of five years and then be reappointed with, or particularly without, a tendering process. That would be an invidious and unfortunate position to have arrived at. We are aware, of course, that the market for the larger authorities is likely to be dominated by a handful of firms. That was one of the reservations expressed on Second Reading and during our previous day in Committee, and I think that most of us, possibly including the Minister herself, are not entirely comfortable with that. To see such a process as a repeat appointment, particularly in the context of these large national outfits, is anti-competitive, if I might put it in that way. It also raises an issue about the kind of relationship that might develop when a firm is anxious to retain the contract.
For those reasons, in my submission it would be better to require not simply a reappointment process but a process that excluded the original firm. There might have to be a backstop position in case nobody else presented. That matter might require, for example, the agreement of the panel and the authority or even, potentially, of the Minister or the department. I suppose one might need that safeguard, but the important principle is that there should not be indefinite appointments of the kind that, as I see it, the Bill would facilitate. I beg to move.