Government Resources and Accounts Act 2000 (Audit of Public Bodies) Order 2008

My Lords, I thank the Minister for introducing the order. I also thank the Minister and the Government Whips Office for their efforts this morning to ensure that we debate the right order. There was some confusion as to whether it included the Churches Conservation Trust, but a revised order, which we understand was laid before your Lordships’ House, was located. The Churches Conservation Trust was within the first order laid but is not within the order that we are debating this afternoon, and we are content with that. I am sure, however, that the Minister will share my concern that those responsible for managing the paperwork processed in your Lordships’ House—admittedly a large task—should identify and learn the lessons from what went wrong in relation to this order. The House will know that these Benches have always supported the report by the noble Lord, Lord Sharman. It is logical and right that public sector bodies are audited by the Comptroller and Auditor-General and so we support the order. However, I have a couple of points to raise with the Minister—he would not expect to escape for Easter without a little work. My first point concerns how it is possible today for a government department to create a public body without, at the same time, creating the appropriate audit arrangements. The Independent Living Fund, for example, seems to have been created by a process that avoided parliamentary scrutiny in 2006. What audit arrangements were made at that time? This order applies the audit arrangements with effect from 2007-08 but what about the earlier period? Who audited that? What was the involvement of the DWP’s accounting officer at the time that the fund was set up? I do not understand how the Pensions Act 2004, which created the PPF Ombudsman, did not at the same time set up the correct audit arrangements. Do parliamentary draftsmen not have audit arrangements in their checklist for new legislation when creating new public bodies? If not, I suggest to the Minister that, in this post-Sharman age, they should. Can the Minister explain what audit arrangements were applied to the PPF Ombudsman before this financial year, and, perhaps of more concern, what have been the audit arrangements for the pensions ombudsman in the 15 years since the Pension Schemes Act 1993 was passed? The second area that I wish to deal with is the NHS. I shall not object to the appointment of the C&AG to NHS Direct instead of the Audit Commission. The Government have put forward a local versus national justification for this but the arrangements for NHS audit, as I have argued in the House before, are odd. The C&AG has always audited the summarised accounts of the NHS, but some clever footwork by the Audit Commission allowed it to grab the bulk of NHS audit work when my party’s NHS reforms in 1990 put an end to the nonsense of the Department of Health itself being responsible for auditing the various authorities within the health service. Since then, both the Audit Commission and the NAO have been involved in both financial and value-for-money work. This is now justified as being at a local and national level, but it involves duplication at the level of the NHS overall. A bolder and more logical approach would be to rationalise the NHS audit by using only one public auditor. That brings me to my third point: whether it is sensible to continue with two public-sector audit systems. The two have already been combined in Scotland and Wales and I understand that the combined organisations work well. Mr John Tiner, who carried out a review of the NAO last year, recommended that, once the governance arrangements of the NAO have been strengthened, a merger of the NAO and the Audit Commission should be pursued. The report gives a number of powerful reasons in favour of merger. Mr Tiner puts six years as the appropriate timescale for reviewing the arrangements. I hope that the Minister will agree that this area should be looked at on a much timelier basis. My fourth area is the audit of publicly owned companies. When this order was debated in another place, the Exchequer Secretary said in response to a question from my honourable friend Mr David Gauke that 40 to 50 companies were expected to be brought within a similar order to the one that we are debating today. The ability for the C&AG to audit companies was included within the Companies Act 2006—again with our support, although it was done in a rather complicated way. Will the Minister give a timetable for the new order? I believe that the appropriate supervisory arrangements have now been put in place and that the practical obstacle of the former C&AG's chairmanship of the Professional Oversight Board has been dealt with by Sir John Bourn's retirement. We hope that the Government will now move quickly on this and I ask the Minister to say when we will see the relevant order. My last point concerns Northern Rock. I am sure the Minister does not expect to escape from Northern Rock in any debate these days. Northern Rock remains a company and the C&AG is now able to audit companies. I am sure that the Minister will say that the Government's ownership of Northern Rock is temporary and that it is, therefore, appropriate to stick with commercial auditors. I will not argue that point with him today. But in the mean time, will the Government ensure that the C&AG has access to Northern Rock so that it can follow the eye-watering amounts of public money that have been poured into Northern Rock and so that C&AG can ensure that taxpayers are getting value for money. The Government Resource and Accounts Act together with the Companies Act give the Government all the powers that they need. They just have to keep true to their own public audit policies and use those powers.