I thank the noble Lord, Lord McKenzie, for his broad support for these measures. I am getting into a bit of a habit of saying that to the noble Lord across the Chamber or, indeed, the Committee. He raised some pertinent points, and he will appreciate that the effects will become much clearer as these changes bed down.
The noble Lord rightly commented on audit committees. Many councils have audit committees, but, conversely, not all local authorities have them. It is up to them whether they do so and we do not require them to have audit committees. However, the Act allows bodies to use the existing audit committee as their auditor panel provided—this is the key point—that it is independently chaired and has a majority of independent members. Where the audit committee does not have a majority of independent members, the body will be able to set up a small independent panel. We know that 31% of existing council audit committees include an independent member—indeed, 15% have two or more.
The noble Lord asked about conflicts of interest as regards an auditor panel. This will be detailed in the guidance which will be issued. He also asked how these committees are configured. It is too early for me to comment on that but we know that many committees already have independent members under the existing set-up. The noble Lord asked various questions about conflicts of interest and about what happens when an independent member is not present, even though he or she is a nominated member of the committee. As he knows as well as I do, the same rules apply to any council committee—namely, if it is inquorate, a decision could not be taken. The key issue here is that of independence. If the independent member is not present, the committee would not fulfil the criteria which have been laid down, and it would be inquorate.