Local Authority Audits (Hansard, 2 February 1987)

§ Lord Peyton of Yeovil
My Lords, I beg leave to ask the Question standing in my name on the Order Paper.

§ The Parliamentary Under-Secretary of State, Department of the Environment (Lord Skelmersdale)
My Lords, the Audit Commission has responsibility for local government audit. I understand from the commission that at 31st December 1986 12 authorities had failed to present balanced accounts for the year ended 31st March 1986.

§ Lord Peyton of Yeovil
My Lords, has my noble friend's attention been drawn to a sentence in the National Audit Commission's report which states that large parts of London appear to be set precisely on a course which will lead to financial and administrative breakdown? Further, does he agree that, while there may be some obvious villains around, nevertheless there has been too much squabbling on this subject and too little thinking? Perhaps my noble friend would care to say now whether the Government have any proposals for reforming the block grant system? From the point of view of complexity it is surely a monument and from the point of view of unpredictability it is as near as we shall ever get to a national lottery. May I further ask my noble friend whether he will take action—

Noble Lords
Order!

§ Lord Peyton of Yeovil
I am copying other examples, my Lords. Will my noble friend take action to curtail the number of councillors who in the name of democracy harass their officials and usurp their functions?

§ Lord Skelmersdale
My Lords, my noble friend in his supplementary questions has ranged very wide indeed on subjects which I suspect will principally be covered in the debate in your Lordships' House on Wednesday. However, for the moment I would say this. The Local Government Finance Act 1982 is the legal base for the current arrangements. When it was going through both Houses it was believed that there was no need for a sanction beyond the auditor's powers of surcharge, which indeed are powerful. But quite clearly from the figures I have given and from what we are told by the Audit Commission the situation has now changed. That is why this matter was a major consideration in the Widdicombe Report. I do not accept that the Government are sitting on their hands.

§ Baroness David
My Lords, can the Minister confirm that two of the authorities which have not submitted their accounts are residuary bodies set up at the time of the abolition of the GLC, and that it is the GLC residuary body and Tyne and Wear which have not submitted their accounts? Can he explain why this is, as these bodies were set up in order to show how effective management could be?

§ Lord Skelmersdale
My Lords, no, I cannot tell the noble Baroness and the House which authorities are among the 12 that I reported on in my original Answer because the Audit Commission is barred by statute from revealing details of individual audits to any third party, including the Government.

§ Lord Mellish
But, my Lords, the commission's report, which has just come to hand and which has had a lot of publicity, is a very serious one indeed. According to the allegations a large number of councillors, particularly in London, have been grossly misspending ratepayers' money. Now I ask a straight 3 question. I understand that there is to be a debate on Wednesday. Are the Government going to spell out then what they intend to do, and if not will the noble Lord spell it out now?

§ Lord Skelmersdale
My Lords, clearly the Audit Commission's report, to which the noble Lord refers, is a damning indictment of inefficiency and waste which cannot be tolerated. That is all I should like to say for the moment, but I shall return to the subject on Wednesday.

§ Lord Boyd-Carpenter
My Lords, can my noble friend say, having said that the situation cannot be tolerated, whether the Government are contemplating introducing more effective sanctions against local authorities which defy the law?

§ Lord Skelmersdale
Yes, my Lords. As I hope I have alluded to already, this is something which is very much in our minds in considering the responses by local authorities and others to the consultation paper on the Widdicombe Report.

§ Lord Underhill
My Lords, does the Minister recognise that we also welcome the debate that is to take place on Wednesday, and the opportunity to answer some of the charges that have been made? Does not the Audit Commission report refer to certain boroughs? Therefore, is it not amazing that the Minister has not been given the information about the two residuary bodies for which my noble friend Lady David asked?

§ Lord Skelmersdale
No comment, my Lords. I do not think it is in the least amazing. What the commission chooses to do is totally within its own remit. That is equally the case if it does not think that it is profitable to answer the Government's questions, or indeed the noble Lord's questions, and that is perfectly above board.

§ Lord Orr-Ewing
My Lords, has my noble friend seen reports that the original report of the Audit Commission was much stronger and that it has been watered down into an expurgated edition which is the one being published? Those alterations, I understand, were put in following representations from the local authority associations. May we have a copy of the original report put in the Library before Wednesday's debate?

§ Lord Skelmersdale
My Lords, I doubt it very much. Certainly I have seen reports to the effect, but the Audit Commission would be the people to approach in this matter. I will ask them, but I doubt it very much indeed.

§ Lord Peyton of Yeovil
My Lords, may I ask my noble friend finally whether he will do his utmost to ensure that the Audit Commission really has powers to do this job properly and to bring home the problems to the public?

§ Lord Skelmersdale
My Lords, it is quite clear from the Audit Commission's report—the most recent 4 report and previous reports—that it has plenty of power and the equipment to bring the matters it finds necessary to report upon before the public.

§ Baroness David
My Lords, if I am correct in saying that the GLC and the Tyne and Wear residuary bodies are late with their accounts, can the Minister say whether the Audit Commission will have the right to report on them as well as on local authorities?

§ Lord Skelmersdale
That is a hypothetical question, my Lords.

§ Lord Taylor of Blackburn
My Lords, does the Minister not find it very sad that we are discussing and asking questions about 12 authorities which have not submitted their reports or have bad reports? Should we not take into account all the authorities in England and Wales which have done a good job?

§ Lord Skelmersdale
My Lords, the Audit Commission's job, as I see it, is to conduct investigations and to help the financial health of local authorities. Obviously, it will turn its attention first to those it considers need that help the most.