AUDITOR GENERAL FOR WALES

HC Deb 03 February 1998 vol 305 cc902-8 7.15 pm

Mr. Ancram

I beg to move amendment No. 331, in page 42, leave out lines 28 and 29.

The First Deputy Chairman

With this, it will be convenient to discuss the following amendments: No. 332, in page 42, line 42, leave out from first 'so' to end of line 43.

No. 476, in clause 92, page 43, line 28, after 'may', insert 'with the agreement of the Assembly.'.

No. 338, in page 44, line 1, leave out from '(7)' to 'shall' in line 3 and insert 'Each member of the staff of the Auditor General for Wales'.

No. 477, in clause 93, page 44, leave out lines 22 to 24.

No. 339, in page 44, leave out lines 25 to 29.

No. 478, in page 44, line 45, after 'Treasury', insert 'and shall publish in the form agreed by the Assembly details of any accounts audited by him during the financial year.'.

Mr. Ancram

Amendments Nos. 331, 332, 338 and 339 are probing amendments. Amendment No. 331 would delete subsection (2), which says: The person for the time being holding that office the office of the Auditor General for Wales— shall by the name of that office be a corporation sole. What is a corporation sole? What does it mean? What would happen if the Auditor General for Wales were not a corporation sole? Would the people of Wales suffer if he were not? Are there financial considerations in being a corporation sole? Does it assist him in carrying out his job? In short, is this a necessary provision? In my limited experience of such matters, it seems a strange provision. I am sure that the Minister will convince me otherwise. I shall listen with interest to his explanation.

Mr. Bernard Jenkin (North Essex)

The Minister is a lost soul.

Mr. Ancram

If the Minister can explain how to transfer from a lost soul to a corporation sole, I shall be even more interested.

The Bill allows the Auditor General to be removed from office on the ground of misbehaviour if the Secretary of State recommends his removal to the Queen. However, the Secretary of State may make such a recommendation only with the consent of the assembly. Amendment No. 332, which is another probing amendment, would delete that extra provision. The approach in the Bill seems rather long-winded. Is it necessary? Either there is misbehaviour sufficient to warrant removal from office or there is not. If there was a wrong accusation of misbehaviour, I presume that the Auditor General for Wales would have remedies.

The assembly could second-guess the Secretary of State on what amounted to misbehaviour. What would happen if the Secretary of State and the assembly disagreed? Is it in the interests of Wales for an Auditor General to remain in office if the Secretary of State believes him to be guilty of sackable misbehaviour? Would that be good for respect for the authority of that important office? Would it not tend to undermine the position of the guardian of the financial integrity of the assembly? I ask in all seriousness whether we should guard against that danger and whether the provision requiring consultation with the assembly is necessary.

Amendment No. 338 refers to clause 92(7). Will the Minister explain its purpose? Does a distinction need to be made between the work of the staff of the Auditor General in their ordinary functions and that requiring them to be a Crown servant for the purposes of the Official Secrets Act 1989? That seems a strange provision. I tabled the probing amendment to find out the thinking behind it. I should have thought that if one is a Crown servant for the purposes of the Official Secrets Act, there is some logic in being a Crown servant otherwise as well.

Amendment No. 339 would omit clause 93(2). I tabled it because the provision seems odd. It appears to relate to the expenses of the Auditor General that cannot be met by income received by him. Provision is made for those expenses to be paid by others. I should have thought that either expenses were allowable and paid from outside, or not allowable and paid for by the Auditor General. The provision seems to cross those boundaries, and it sparked a degree of interest—not to say suspicion—in my mind. I should be grateful if the Minister could set my mind at rest and assure me that there is nothing to be suspicious about.

Mr. Rhodri Morgan

I assume that the answer to the many questions asked by the right hon. Member for Devizes (Mr. Ancram) relates to the staffing structures of the assembly and the fact that the Auditor General's staff have to be firmly placed outside the assembly's staffing structures.

One of the controversies about setting up the assembly is whether Welsh Office civil service staff who will be transferred to work for the assembly will include what one could approximately call parliamentary staff. Such provision has been made separately for the Scottish Parliament but not for the Welsh assembly. The Welsh assembly's equivalent to parliamentary Clerks will not be separate from general assembly staff; they will be civil servants. There may be Chinese walls between them. In order to ensure that the Auditor General's staff are clearly not civil servants and not part of such an arrangement—which may itself come into question before the Bill has completed its passage—they have to be deemed a corporation sole. The Auditor General's staff will stand alone and be responsible only to the Auditor General.

I am not absolutely sure of my explanation, so I shall listen to any other possible explanations. I believe that the Bill has been structured in such a way to address the issue of how to separate the Auditor General's staff and to whom they are accountable; it ensures that they are not part of the general civil service of the Welsh Office.

Mr. Dafis

I wish to speak to amendments Nos. 477 and 478. Amendment No. 477 is not unlike amendment No. 339, but it would not omit so many lines of clause 93. It also concerns payment of the Auditor General's expenses and relates to additional expenditure that is not covered in the block. Would not such expenses be more appropriately met by the Auditor General's resources? In other words, why should not the money come from the Treasury?

Amendment No. 478 is simply about openness, and would provide for the publication of accounts audited by the Auditor General. Will the Minister say whether such publication will be required?

Mr. Desmond Swayne (New Forest, West)

The question that occurs to me is whether the Auditor General is the servant of the assembly or of the Crown. From clause 90, it would appear that, as he is appointed by the Crown and can be sacked by the Secretary of State—albeit with the approval of the assembly—he is a servant of the Crown. However, under clause 91, he is to be paid by the assembly. I am not sure whether one can—or indeed ought to—serve two masters in that respect.

Our task in Committee must be to remove potential points of conflict. One potential point is brewing in the arrangements for the dismissal of the Auditor General. If the Auditor General has lost the confidence of the assembly, which pays him, he should go, irrespective of what the Secretary of State might think. If he has lost the confidence of the Secretary of State, but still has the confidence of the assembly, the obverse of the conflict arises. The Bill must provide for one or the other. The merit of amendment No. 332 is clarity; it provides for one and not the other.

Mr. Öpik

The Liberal Democrats similarly seek clarification. There seems to be a lack of certainty about whether the Auditor General will work for the Government or will be more independent. It goes without saying that we would prefer the post to be independent.

Perhaps it is just my schooling, but I, too, do not know what corporation sole means. It sounds like a technical description of a ghost, although I am sure that that is not the intent. I should be grateful for clarification.

I should like to make an observation on amendment No. 339. If we removed the specification that the assembly covered the Auditor General's expenses, even when they were caused by a failure on his or her part, we would effectively be introducing a fine. That is not the right way to go about things. If the individual is incompetent in the role, he or she should be released from employment. If there is a case for a fine, it should be pursued through the legal process. It would not be rightbasically—to fine through expenses. I should welcome the Government's views on that.

Mr. John Hayes (South Holland and The Deepings)

I want to reaffirm the points raised by my right hon. Friend the Member for Devizes (Mr. Ancram) in two particular areas.

First, I hope that the Minister will be able to satisfy my inquiry about whether it is necessary to make the Auditor General a corporation sole when, as I understand its legal implications, it would make the Auditor General legally liable. I am interested in examples of when that might be deemed necessary.

The second point, which has been referred to by my hon. Friend the Member for New Forest, West (Mr. Swayne) and is dealt with by amendment No. 332, is the removal of the Auditor General. It could cause conflict to make his removal subject to, first, consultation and, secondly, the approval of the assembly. One notices that they are separate. Surely that could open up a can of worms because, if the Auditor General were in conflict with the assembly, the consultation and approval process would be fraught with difficulties.

The amendments tabled by my right hon. Friend the Member for Devizes address both those issues. I should be grateful to hear what the Minister has to say about them.

Mr. Hain

This debate is clearly not a great crowd puller, but it seems to have been designed to keep a Minister on his toes. The Bill provides for the appointment of the Auditor General for Wales by Her Majesty, which underlines the post's independence.

I accept that, as the right hon. Member for Devizes (Mr. Ancram) said, the amendments are probing, and I stress the importance of the Auditor General's independence. Although he will be appointed by Her Majesty, subsection (7) states that he shall not be regarded as holding office under Her Majesty or as exercising any functions on behalf of the Crown". As the Auditor General will not be a Crown servant—he will be an independent being—it is necessary to make clear his powers to enter contracts. That answers the legitimate questions asked by the hon. Members for New Forest, West (Mr. Swayne) and for Montgomeryshire (Mr. Öpik).

7.30 pm

The right hon. Member for Devizes and the hon. Members for South Holland and The Deepings (Mr. Hayes) and for Montgomeryshire asked about corporation sole. My hon. Friend the Member for Cardiff, West (Mr. Morgan) said that it sounded fishy, but I shall let that pass. Subsection (2) provides that the Auditor General for Wales shall by the name of that office be a corporation sole. That means that he has a legal personality equivalent to that of a company.

That replicates a similar provision in schedule 2(1) to the National Audit Act 1983, which applies to the Comptroller and Auditor General. It ensures that there will be no doubt about the power of the Auditor General for Wales to enter contracts for such mundane items as electricity or stationery for his office, or about his powers in more substantial matters such as the right to sue or be sued.

The Auditor General's status as a corporation sole will mean that rights and liabilities can attach to the office rather than to the individual office holder—people can sue the office rather than the individual office holder. Amendment No. 331 would delete subsection (2) and throw the position into confusion.

Amendment No. 332 would remove the requirement for the Secretary of State to consult the assembly before recommending to Her Majesty the removal of the Auditor General on the ground of misbehaviour. I accept that those are unlikely circumstances, but the White Paper made it clear that my right hon. Friend would advise Her Majesty on appointments that she made. We are considering requiring him to consult the assembly about those appointments by means of an order under clause 31.

Mr. Rhodri Morgan

There is a complex history to the ways in which extra-parliamentary figures can be removed in extraordinary circumstances. Today, many hon. Members have been considering whether the Director General of the National Lottery can be removed. Some directors general can be removed by a resolution of both Houses but, according to section 1(4) of the National Lottery Act 1993, which governs Oflot,

The Secretary of State may remove a person from office as Director General on the ground of incapacity or misbehaviour. That is parallel to what we are discussing, except for the fact that the Auditor General is supposed to provide, for the Back Benchers, protection against an abuse of power by Front Benchers in the assembly or any quango or public bodies that are accountable to the assembly. The assembly should be involved in the decision to remove the Auditor General, however exceptional the circumstances might be.

Mr. Hain

My hon. Friend makes a valid point. As the assembly will be consulted about the appointment of the Auditor General, it is consistent that it should also be consulted about his removal from office—of course, we hope that the need for removal on the ground of misbehaviour will never arise. The assembly will have a closer working relationship with the Auditor General than my right hon. Friend will, so it is right that its views should be taken into account.

Amendment No. 476 would require the Auditor General to obtain the assembly's agreement before appointing staff or securing services. The Government do not consider that appropriate, as it would fetter the Auditor General's independence, which is especially important to his role in ensuring that the most effective and efficient arrangements are made.

The Auditor General will be obliged, under clause 93(4) to (7), to consult the assembly's Audit Committee, which will be chaired by a member of a minority party, about his budget. That offers real protection for the Auditor General's independence of operation. Although he will not be accountable to the Committee in the usual sense, he will have to consult it and his arrangements will have to be transparent. It is more appropriate that the assembly's views be taken into account in that way than by the means suggested in the amendment.

Mr. Hayes

The possible contradiction between accountability and independence lies at the heart of the amendments. Does not what the Minister said about amendment No. 476 compromise what he said about the removal of the Auditor General? If the Auditor General is to be truly independent, he should not be bound by the possibility of being removed through the processes of consultation and agreement that we debated earlier.

Mr. Hain

The hon. Gentleman makes a fair point, which I do not want to dismiss or deride. It is difficult to strike the correct balance in these matters, but I think that we have done so in the Bill.

Mr. Ancram

If the Secretary of State believed that there had been sufficient misbehaviour to warrant dismissal but the assembly disagreed, would not that give rise to an unsatisfactory situation in relation to the Auditor General and his ability to continue his work?

Mr. Hain

If the exact circumstances that the right hon. Gentleman describes arose, there would clearly be a crisis around the Auditor General. It is difficult to imagine that he would retain the confidence of the democratic fraternity in which he will have to operate in Wales. It is important that there is maximum agreement between the assembly and the Secretary of State, but if the two were in an open conflict, we would have to live with it. The arrangements suggested in the Bill are the best in the circumstances.

Legislation that creates new public bodies often makes it clear that they are not to be regarded as exercising functions on behalf of the Crown, even when, as in the Auditor General's case, they are appointed by Her Majesty. That makes it clear which bodies or office holders are Crown bodies or Crown servants and which are not. That affects how other legislation applies to them. For example, Crown servants are automatically covered by the Official Secrets Act 1989. Crown bodies enjoy various exemptions under legislation. Amendment No. 338 would alter that unacceptably.

In the case of the Auditor General and his staff, we decided to follow the precedent of section 3(5) of the National Audit Act 1983 and Statutory Instrument No. 200 of 1990, which provide that the Comptroller and Auditor General and his staff are not treated as Crown servants except for the purposes of the Official Secrets Act 1989. That Act should apply to the Auditor General for Wales and his staff because of the access that they may have to classified papers.

Amendment No. 477, tabled by the hon. Member for Ceredigion (Mr. Dafis), would omit clause 93(1), which would leave it unclear as to who would meet the Auditor General's expenses. As the major benefit of his work would be for the assembly and its public bodies, it is right that the cost should fall to the Welsh block. The assembly will meet all his expenses, to the extent that they are not covered by income. The principal source of income will be audit fees for public bodies' accounts, under clause 93(3).

Mr. Dafis

Can the Under-Secretary give the Committee any idea of the total costs of the Auditor General?

Mr. Hain

The costs will be modest.

Amendment No. 339 would delete clause 93(2), which is modelled on a similar provision in section 4(6) of the National Audit Act 1983, which applies to the Comptroller and Auditor General. It is necessary to ensure that any sums payable as a result of a breach of duty are part of the expenses of the Auditor General for Wales. Without that provision, he might become personally liable for such costs and that would not be desirable.

Amendment No. 478 would impose a duty on the Auditor General to publish accounts of the bodies that he audits. That is unnecessary for the following reasons. All accounts audited by the Auditor General will have to be laid before the assembly, under clause 97(5) in the case of the assembly's accounts and under clause 138 in respect of the accounts of public bodies, the relevant functions of auditing their accounts being transferred to him by order. Clause 103 requires the assembly to publish all accounts laid before it by the Auditor General. As to the form of the accounts prepared by the public bodies, that will be the subject of directions by the assembly. The relevant powers will be transferred from my right hon. Friend the Secretary of State for Wales to the assembly by Order in Council under clause 22.

I hope that, with the benefit of those explanations, the right hon. Member for Devizes will agree to withdraw the amendment.

Mr. Ancram

I thank the Minister for those explanations, which were genuinely helpful in casting light in some dark places. In the previous debate, the Minister told us how mischievous we were to seek to include an amendment that would require the Secretary of State to consult, because he would do so anyway, and, in this debate, he has told us how irresponsible it would be to remove the requirement to consult, because the Secretary of State might not do so otherwise. Having been in the Minister's place, I know how difficult it is sometimes to reconcile notes from officials, but it is a joy for the Opposition to watch such tangles emerging. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 90 ordered to stand part of the Bill.

Clauses 91 to 98 ordered to stand part of the Bill.