HL Deb 23 May 1949 vol 162 cc969-75

6.31 p.m.

Read 3a (according to Order), with the Amendments.

The Schedule:

Accounts and audit

33.—(1) The accounts of the Board shall at all reasonable times be open to inspection and transcription without payment by any member of a constituent council or the county council, or by any officer of any such council authorised by that council for that purpose and shall be subject to audit by a district auditor.

EARL DE LA WARR moved, in paragraph 33 (1) to leave out "and shall be subject to audit by a district auditor" and insert:

  1. "(a) The accounts of the Board shall be audited annually;
  2. (b) The Board shall by a resolution passed not later than two months after the appointed day (hereinafter in this section referred to as "the initial resolution") adopt either the system of district audit or the system of professional audit;
  3. (c) The provisions of Part X of the Local Government Act, 1933 (other than those of sections 237 and 238) shall mutatis mutandis and with all necessary modifications extend and apply to the Board as if the Board were the council of a borough:

Provided that—

  1. (i) neither the requirement as to a two-thirds majority prescribed by paragraph (a) of subsection (4) of section 239 of the said Act of 1933 nor the provisions of paragraph (b) 970 of the said subsection shall apply to the initial resolution; and
  2. (ii)paragraph (b) of subsection (3) of the said section 239 shall have effect as if the Institute of Chartered Accountants in Ireland were one of the bodies specified in the said paragraph and as if at the end of that paragraph there were inserted "or any other body of accountants established in the United Kingdom and for the time being recognised by the Board of Trade for the purposes of the provisions of section 161 of the Companies Act, 1948, relating to the qualification for appointment as auditor of a company other than an exempt private company."
( ) It shall be lawful for the Board subject to the consent of the Minister at any time and from time to time after they have passed the initial resolution by means of a subsequent resolution passed and confirmed in accordance with subsection (4) of the said section 239 to adopt the other of the two systems which are referred to in the said section 239.

The noble Earl said: My Lords, I do not think it is necessary for me to detain you by repeating the arguments and points that were put fully to your Lordships last Thursday, but perhaps I may briefly restate the case The Water Board favour having their accounts checked and audited by a professional auditor. The Minister of Health, on the other hand, is in favour of the district auditor, because according to the noble Lord, Lord Shepherd, he feels that that represents progress. The Joint Committee of both Houses considered the matter carefully and came to the conclusion, after taking all evidence, that the Water Board should be permitted io make their own choice between the two systems. This was not an unreasonable compromise with which I think the House may feel inclined to express its agreement.

No evidence of a trend towards district auditors was adduced, in spite of the fact that Lord Shepherd said it was very much in evidence. Nor were we informed why, if such a trend were taking place, it should be considered particularly progressive. But the course of the debate showed clearly that it is not in fact taking place. Most local authorities, such as county and district councils, have no choice. Therefore, their use of the district auditor can by no stretch of imagination be considered to represent an expression of opinion either way. The only councils that are able to choose are those of the boroughs and county boroughs; and in all these a very considerable majority have decided in favour of a professional auditor.

I am afraid that the noble Lord, Lord Shepherd, and I have been unable to reach agremeent on this matter, as I hoped at one time that we should do, by the Report stage. Certain alternatives put forward by me were fully discussed, but did not command the approval of the Minister of Health. I should like to take this opportunity of thanking the noble Lord for his courtesy in the matter of meeting me, and for doing personally everything that he could to arrive at a settlement. I only hope that on further consideration the Minister of Health may still feel that the compromise put forward by the Joint Committee is not only reasonable but right. After all, it is not asking much to suggest that a great body such as this Water Board, composed, I think, of representatives of no fewer than sixteen local authorities, should be allowed to make this simple choice for themselves.

Even more important than the merits of this question is the question of the correct procedure of Parliament—by this I mean the desirability, from the point of view of both Parliament itself and all possible petitioners, that the recommendations of Committees of one House or both Houses shall not be lightly put aside. If this machinery is to command the respect that it must command, if members of both Houses are to give up their time, and if local authorities and other petitioners are to go to the immense trouble and expense necessary to ensure full and detailed consideration of their case, they must all know from the start that decisions of the Committee will be reversed only if, to use the words of Mr. Greenwood, National policy is involved or is likely to be imperilled or embarrassed. In view of the facts that have emerged from our discussions, no one could possibly contend that in this case national policy had been shown to be involved, let alone imperilled or embarrassed. For this reason, as well as on the merits of the particular case before your Lordships, I beg to move this Amendment.

Amendment moved— Page 19, line 24, leave out ("and shall be subject to audit by a district auditor") and insert the said new words.—(Earl De La Warr.)

6.37 p.m.


My Lords, I apologise for addressing you at this late hour, but as I was the second representative of your Lordships' House on the Committee, I should like to make two or three brief points. Your Lordships may remember that the noble Lord, Lord Darwen, was unfortunately not able to carry out his duties on the Committee because of illness, and therefore it fell to the noble Lord, Lord Belstead, and myself, to represent this House. The first point I wish to make is that we were very conscious indeed of the responsibility of being on this Committee, which was the first of its kind to sit under the Special Procedure. It had a great responsibility, the responsibility of being, as it were, pioneers. Although there was a certain amount of discussion we had one thing in common and that was the middle name of Agag, for we trod very carefully indeed. Secondly, the particular point concerning the audit arose at the very end of the proceedings. We paid particular attention to this matter, and we were alert and very much aware of the feeling about it. And when the Committee gave their decision I could discern no disappointment and no expression of surprise in any quarter of the Committee room. Thirdly, it seems to me that this Special Procedure can be compared to a form of arbitration. The Minister had, quite properly, noted objections to his Order, and had handed it over to the Committee for arbitration. But when we had arbitrated he said, in effect, "But I didn't mean you to arbitrate against me." I think that if your Lordships were to read through the very great amount of evidence, amounting on this point to 44 columns, you would indeed feel strongly inclined to support this Amendment.

6.40 p.m.


My Lords, I much appreciate the very kind remarks which the noble Earl, Lord De La Warr, has made about myself. They are all the more welcome because I and my colleagues on these Benches look upon ourselves not only as Ministers of the Crown but as servants of your Lordships' House; and we are always very willing to co-operate in reaching settlements where settlements are possible. I cannot complain about the attitude of the noble Earl, who has been friendliness itself in the negotiations; and it is not the fault of either of us that we have been unable to reach agreement. In reply to the noble Lord, Lord Rea, I would remind your Lordships that this Committee tabled a number of Amendments. All the Amendments except two were accepted, so we are discussing the action not of a Minister who "washed out" all the efforts of the Committee, but of a Minister who agreed to the major part of the Amendments proposed. Therefore, the question to be decided is whether the Minister was justified, not in taking action but in the kind of action he did take, because undoubtedly under the law the Minister has the power to take action in recommending Parliament to change the proposals of a Joint Committee.

May I ask the noble Earl, Lord De La Warr, to note a small error in his opening remarks? The Minister and the Committee were not requested by the Water Board for liberty to employ professional auditors. No such request has been made by the Water Board, either to the Committee or to the Minister. This matter came to the attention of the Committee from one of the national associations of accountants. I mention that, not because I want to score a point but because it shows that the Minister has not turned down any request made in this matter from any of the bodies that will be affected. I ask the House to believe in the good intentions of the Minister. I believe that he has been absolutely straightforward in the decisions that he has reached. He is completely in line with all the great Governments of the past eighty years, and in that respect can be said to be carrying out public policy.

May I remind the House that the district audit was first put into operation by the Parliament of 1875 under the Premiership of Disraeli? It was next extended in the Parliament of 1888, in the establishment of the county councils, under the Premiership of the third Marquess of Salisbury, the grandfather of the Leader of the Opposition in your Lordships' House. The Minister is in line with the Parliament of 1894, which gave us the urban district councils and the rural district councils, under the Premiership of Gladstone. He is also in line with the Parliaments of 1899 and 1902, when the metropolitan borough councils were established and the Metropolitan Water Board was set up, under the Premiership of Mr. Balfour, who afterwards became a distinguished member of your Lordships' House. It may be said that this line of development is of the distant past, but it can easily be brought up to date. My noble Leader who is sitting on my left was in 1930 responsible for another extension of local government—namely, the establishment of the drainage boards. These drainage boards were provided with the district audit for accounts. Since the last war, this Government, under the Premiership of Mr. Attlee, has introduced into this House a Bill providing the same sort of principle for water boards. All the water boards are subject to the district audit and this continues a progressive public policy. Therefore, whilst the action of this Committee was in their view justified, it was completely opposite to what had become settled public policy.

I wish to say only one word further, because I want to establish the claim that I make that there is a trend towards the district audit. For instance, the noble Earl has indicated that the county boroughs and the boroughs have had the option of choosing either the district auditor or the professional auditor. He has suggested that this is an indication that there are considerable doubts about the efficacy of the district auditorship and a preference for the professional auditorship. I do not know whether the noble Earl is aware of it, but it is true to say that the municipal boroughs in England and Wales, year by year are coming more and more within the ambit of the district audit. A great number of the larger accounts are subject to that auditorship to-day. Here are a few examples.


By their Option?


No, they come within the district auditorship laid down because of the grants that are paid by the Government towards these particular functions. That is the reason for it. For example, there is education, police, the health services, rating and valuation, housing, the Children Act, the Rate Fund, and others. So, whilst it is still true to say that the county boroughs are to be considered as bodies apart, the municipal boroughs, of which there are a large number, are falling within the ambit of the district audit, and therefore the district auditing of the accounts covers a much wider area than the professional auditing. We agree that this subject is one worthy of discussion. We believe that at some time a discussion must be held on a proper plane and perhaps a decision reached. But we respectfully suggest to noble Lords opposite that, in the case of a particular Order contained in this Bill, confined as it is to a small area in space, even though a substantial number of authorities come within it, it is neither the time nor the place for a decision on a complete reversal of policy to be taken. In view of that we hope that your Lordships will not press the Amendment upon this House, but will allow the Bill to go through unamended in this respect.

On Question, Amendment negatived.

Bill passed, and returned to the Commons.