SCOTTISH CONSOLIDATED FUND (Hansard, 19 May 1998)

§ Mr. McLeish
I beg to move amendment No. 147, in page 26, leave out lines 31 to 32 and insert— `( ) The Fund shall be held with the Paymaster General.'

§ Mr. Deputy Speaker
With this, it will be convenient to discuss Government amendments Nos. 272, 148, 273 to 279 and 281.

§ Mr. McLeish
In Committee, I said that I would consider carefully the points made by the right hon. Member for Haltemprice and Howden (Mr. Davis), the Chairman of the Public Accounts Commission, with a view to tabling amendments designed to strengthen the independence of the head of the audit service of the Scottish Parliament, and to provide for the appointment of accounting officers in the Scottish Administration. I hope that amendments Nos. 273, 274 and 278 will fulfil that undertaking.
Amendment No. 273 provides that the independent person who is to undertake, or supervise the undertaking of, audit and related functions will be the Auditor General for Scotland, established by amendment No. 278, which also provides that the Auditor General will be appointed by Her Majesty on the nomination of the Scottish Parliament, and that he or she can be removed from office by her Majesty only after a resolution of the Parliament.
762 Taken together with the existing provision in clause 66(4), these proposals ensure considerable independence and status for the audit service, and provide that its head cannot simply be removed by the Executive.
The second part of amendment No. 274 deals with accounting officers. It provides that Scottish legislation must provide for officials to be designated as answerable to the Scottish Parliament for the expenditure and receipts of each part of the Scottish Administration. Thus, the Parliament and its Committees will have direct access to officials.
The first part of amendment No. 274 clarifies that it is the auditors who must, under Scottish legislation, be given access to documents that they may reasonably require for their functions. The previous drafting was imprecise on that matter.

§ Mr. Salmond
Can the Minister confirm that he is not suggesting a local authority set-up, with an outside body appointing the auditors, and that the Parliament will look after its financial affairs properly without being overseen by a higher authority, as though it could not be trusted to conduct its affairs efficiently?

§ Mr. McLeish
Yes, that is the case. The intervention of the Chairman of the Public Accounts Commission highlighted the seriousness with which any parliament must take those issues. The Government considered that the legislation had not treated the matter with the appropriate seriousness, and tabled amendments accordingly.
Amendment No. 147 is essentially technical, designed to make it clear that the Scottish Consolidated Fund will be held with the office of the Paymaster General. The existing provision is misleading, since the office, although it provides payments and receipt services for the Government, does not provide banking services as such.
The new provision makes it clear that the fund will be held as an account with the office of the Paymaster General, ensuring that overnight balances are available to be swept back to the National Loans Fund, thus reducing overall Government borrowing. However, the Scottish Executive will be able to maintain subordinate bank accounts with commercial banks if that makes sense.
Amendment No. 148 is for clarification. It makes it clear that Scottish legislation must provide for persons receiving money directly from the Scottish Consolidated Fund to account for all their expenditure and receipts. That would include receipts obtained by them but not paid into the fund because, for example, Parliament had authorised alternative disposal or accounting under clause 61(4).
Amendment No. 279 inserts a new subsection in clause 66, to ensure that Scottish legislation is not required to make provision for accounts to be prepared by cross-border public authorities, when they are specifically dealt with under clause 84 or another enactment, or generally to impose accounting or auditing requirements when other legislation makes provision for accounting and audit. That is to avoid any clash between clause 66 and such other legislation.
The new subsection also means that Scottish legislation will not have to provide for the Auditor General to audit his own accounts, which would clearly be wrong. It defines two new terms: "parliamentary accounts" and "Scottish legislation", which are used to simplify the drafting.
763 Amendments Nos. 272, 275 to 277, and 281 are consequential on the others and amend references to make use of the new terms "Auditor General for Scotland", "parliamentary accounts" and "Scottish legislation".

§ Mr. David Davis (Haltemprice and Howden)
I thank the Minister for that explanation. Amendments Nos. 278 and 274 implement the concessions that he made in Committee, in response to my proposals to provide better for the Auditor General for Scotland's security of tenure and to provide for accounting officers. The amendments, as he described them, are broadly in line with what I wanted, and I am grateful.
Amendments Nos. 278 and 274 are broadly consistent with the amendments that I originally tabled. Amendment No. 278 goes slightly less far than I had hoped, in that a resolution for the removal of the auditor will not require a Division. That contrasts with the provision for the removal of judges in clause 89, but, for some reason, is in line with that for a dissolution in clause 3.
The Scottish Office view is that the dissolution model is more appropriate for removing the auditor. There is a clear parallel between an independent auditor general and an independent judge, so I think that the judge model is better. It requires a Division, and would not allow an Administration to slip a proposal through Parliament, as we know is possible.

§ Mr. Dalyell
This question is not meant offensively, but is this also the professional view of the current Comptroller and Auditor General?

§ Mr. Davis
Indeed. The hon. Gentleman is right: I have discussed the matter with the Comptroller and Auditor General. We agree on all these points. I should like the Minister to say why this approach has been taken. It seems anomalous, and is difficult to understand.
I also raised in Committee the question of a scrutiny committee of the Scottish Parliament, not identical to or with the same name but modeled on, our Public Accounts Committee. Its chairman should come from the Opposition, and certainly not from the Executive or the coalition making up the Executive. That would be an important advantage and addition to the Scottish Parliament. There is no amendment to that effect. I would like to hear what the Minister has to say on that.
The amendments do not address the other financial matters raised in Committee. The result will be inefficient, and probably ambiguous, accountability to Westminster for the funds granted to the Scottish Parliament, with the consequent risk of conflict over those matters.
The principal absences are the UK Parliament's need to know the purposes for which it would be expected to vote money for the Scottish Parliament; the need for the Secretary of State to be properly accountable to this House for the grant of the Scottish Parliament; and the need for the Comptroller and Auditor General to have continuing access in Scotland to provide assurance to the UK Parliament about the spending of UK taxpayers' money.
Amendments were tabled in Committee to protect the rights of this House and of the UK taxpayer. I hope that the House of Lords will revisit those matters and correct 764 them. However, it would be churlish not to thank the Minister for his two concessions. They will be helpful, and are in the interests of the people of Scotland.

§ Mr. Gorrie
I wish to touch on a point raised by the Chairman of the Public Accounts Committee, the right hon. Member for Haltemprice and Howden (Mr. Davis): the number of Members of the Scottish Parliament necessary to vote for the removal of the auditor general. We have tabled an amendment that the figure for judges should be three quarters. I ask the Minister to consider that three quarters might be more intelligent than two thirds. The whole thing is flexible, but it is likely that the Scottish Parliament will have a coalition Executive. The two, or even three, parties concerned might have two thirds of the votes. There would not be the same defence for the auditor general against the Executive if there was a quarrel.

§ Mr. David Davis
I agree with the thrust of the hon. Gentleman's argument. The Comptroller and Auditor General for the Westminster Parliament can be removed only by separate votes of each House of Parliament. That is a formidable barrier for a Government wishing to remove an awkward or difficult auditor general—that is, one who is doing his job. I agree that the hurdle should be raised even higher.

§ Mr. Gorrie
It is important that such officials have security. I was a member of a council that badly sacked its chief executive on the hoof. Three quarters might be safer than two thirds. I notice, in the light of the interest in trade union votes, that, on the same basis, two thirds of Members of Parliament would be required to vote.

§ Mr. Dalyell
While there is an important meeting upstairs concerned with trade union recognition and the visit of the Scottish Trades Union Congress, and this is a quiet, gentle debate, these are crucial, not arcane, matters. They go to the heart of responsibility for money.
The reason I interrupted the Chairman of the Public Accounts Committee is that, like my hon. Friend the Minister, I was educated—I choose that word rightly—on the Public Accounts Committee by the Comptroller and Auditor General—in my case, Sir Edmund Compton. The concerns of the Comptroller and Auditor General must be answered. We are operating under a guillotine, but I hope that the other place looks carefully at these matters. Unless they are sorted out, it will lead to endless trouble.
The reason is basic. The subordinate Parliament is part of a unitary state, and is dependent on the overwhelming bulk of its money being raised by the other part of the state. That other part will doubtless be characterised as the parsimonious people in Great George street, or the English Chancellor—one can imagine all the phrases that will be used.
Members of the Scottish Parliament, whatever their personal feelings, will be under pressure to report to this House on how money is used. There will be overwhelming demand for better services, education, health and everything else in Scotland that requires expenditure. The pressure on Members of the Holyrood Parliament to accede to such requests, or at least to say that they are doing their best, will be terrific.
765 In those circumstances, sooner rather than later, this House will ask those who have departed this House to account for their use of money. I do not suggest that there will be anything corrupt about it, that there will be misappropriations, or that big nanny is needed to look after expenses; it is the politics of the situation. In those circumstances, the position of the Public Accounts Committee is crucial. The other place should explore that.

§ Mr. Jenkin
I thank the Minister for his concessions to my right hon. Friend the Chairman of the Public Accounts Committee, but I underline what he finished by saying. There is a fundamental imbalance in setting up a Parliament that is not responsible for securing its own revenue. As long as the Scottish Parliament has such extensive reliance for its supply on this House, there will inevitably be tension between it and the Westminster Parliament. As the hon. Member for Linlithgow (Mr. Dalyell) said, that relationship will be difficult to manage politically. The amendments do nothing to resolve that fundamental imbalance.

§ Mr. McLeish
There is not a fundamental confusion, but a misunderstanding. I agree with the hon. Member for North Essex (Mr. Jenkin) and my hon. Friend the Member for Linlithgow (Mr. Dalyell) that there will be tensions and pressures on public policy on finance. That is the nature of the changes. However, we are discussing how we examine what we are spending, and how to ensure that we have a first-class system for accountability, efficiency and effectiveness, and all the issues of probity.
I shall respond briefly to the Chairman of the Public Accounts Committee. I thought that the possibility of the Auditor General being removed without a Division would be of concern. On a Division, two thirds of the Members would be required to vote in favour. We do not envisage it being a factual proposition that the Executive would try to sneak through, if I may be allowed to use that phrase, a motion late at night, or in any other circumstances to try to achieve that.
On a second, and perhaps more positive, note, a meeting of the all-party consultative steering group yesterday agreed that, as part of the Standing Orders, we might want to identify a few Committees to recommend to the Scottish Parliament, and that one would be the equivalent of the Public Accounts Committee. I hope that that will satisfy the Chairman of the Public Accounts Committee, and ensure that the integrity of the person who chairs such a Committee is beyond doubt.
Clearly we will be expecting a high standard of deliberation. Like my hon. Friend the Member for Linlithgow, I enjoyed my experience on the PAC, and I have no doubt that the quality will be there in Scotland to ensure that we replicate that part of the scrutiny procedure.

§ Mr. David Davis
Clearly, I welcome—
It being one hour and fifteen minutes after the commencement of proceedings on consideration of the Bill, MR. DEPUTY SPEAKER, pursuant to the Order [13 January] and the Resolution [12 May], put forthwith the Question already proposed from the Chair. Amendment agreed to.