My Lords, I beg to move that this House do agree with the Commons in their Amendments 1 to 14 en bloc. I shall speak also to the other amendments in this group, which amend the provisions for the appointment of local auditors.
Although I see that the Bill is not attracting a great deal of attention this afternoon, it is worth saying briefly that it increases local accountability and transparency, and helps local people to hold councils and local bodies to account for their spending decisions. The Bill is the final step in a programme of reforms to local audit that will result in an estimated £1.2 billion of savings over 10 years.
Before I go on to explain the amendments in this group, I pay tribute to my predecessor and noble friend Lady Hanham, who, as noble Lords will know, was responsible for taking this Bill through your Lordships’ House last year. All credit should go to my noble friend for amendments that the Government have accepted or are making to the Bill in response to debates in your Lordships’ House. I know that other noble Lords would want to join me in acknowledging her work on the Bill. I only regret that she is not in her place today. Indeed, because of the technical nature of the Bill, I perhaps regret that she is not at the Dispatch Box, but I will do my best.
Commons Amendments 1 to 13, 17, 31 and 33 would enable the development of sector-led collective procurement arrangements. They would allow the sector to come together and, if it wishes, to establish a body to procure auditors on behalf of local public bodies that choose to participate. These amendments fulfil a commitment made by the Government during Report in the Lords and reflect opposition amendments proposed
both here and in the other place. The Government recognise the potential benefits of local authorities coming together jointly to procure their auditor as a means of achieving efficiencies and economies of scale and keeping audit fees low.
The Bill already allows two or more authorities jointly to procure their auditor. However, following calls from the sector—the Local Government Association in particular—and noble Lords, these amendments go further to allow for large-scale collective procurement led by a separate sector-led body.
As the Government have previously stated, any collective procurement arrangements established under these regulations will be voluntary. Local authorities will be able to choose to participate or to make their own appointment locally.
Commons Amendment 17 inserts into the Bill a new clause that will allow the sector to establish collective procurement arrangements. Under the new clause, the Government will, by regulations, make provision for certain authorities to have their auditor appointed by an “appointing person” specified by the Secretary of State. This will allow the Secretary of State to designate a sector-led body as an appointing person, and give them the necessary powers and duties to act as a collective procurement body. From now on, I will refer to the appointing person simply as the sector-led body.
Regulations will set out the process by which authorities choose to participate in sector-led arrangements, the process for specifying a sector-led body, and the powers, functions and duties of such a body. This would include, for example, a power to levy fees on opted-in authorities, and a corresponding duty on the body to consult before setting those fees.
Regulations under the new clause will also be able to modify other parts of the Act as they apply to authorities that have opted into the collective procurement arrangements. We intend to use this power to ensure that, where necessary, other provisions reflect the different appointment process for these authorities. For example, authorities that opt in and do not make their own appointment will not need to establish an independent auditor panel.
Commons Amendment 31 provides that regulations made under this new clause will be subject to the affirmative procedure. The Government also intend to consult publicly on draft regulations before they are made.
Commons Amendments 1 to 3, 13 and 33 would make minor changes to the definition of a local auditor in the Bill. These minor amendments are necessary in the light of the wider amendment to enable sector-led collective procurement. They reflect the fact that an authority could in future have their auditor appointed by a sector-led body, rather than make an appointment itself.
Commons Amendments 4 to 12 would make a number of minor changes to the existing provisions in the Bill that already allow for sector-led collective procurement for smaller authorities. They ensure consistency with the new clause introduced by Amendment 17, and clarify the Government’s powers to make regulations in relation to such arrangements.
Commons Amendment 14 will ensure that the term of an auditor’s appointment is confirmed publicly when the appointment is made. It will support greater transparency, and ensure that the public and audit firms know when the existing audit contract for a local body is due to end. The amendment reflects previous discussions on this matter both here and in the other place. Having considered the case for this further, the Government accept that it would be useful to put the matter beyond doubt through this amendment. The noble Lord, Lord McKenzie, proposed a similar amendment in Committee and will, I hope, therefore welcome this amendment today.
Amendment 46 is a minor amendment that would clarify that existing legislative requirements will continue to apply to audit committees of health service bodies where they act as the independent auditor panel. This will ensure that the operation of legislation governing health body audit committees is not unintentionally affected by this Bill.
There has been strong support for a collective approach to auditor procurement and appointment from all sides of the House during the passage of the Bill, and I hope these amendments will be welcomed.