§ 3.27 p.m.
The Minister of State, Department of the Environment (The Earl of Caithness)
My Lords, I beg to move that the Bill be now further considered on Report.
§ Moved, That the Bill be further considered on Report.—(The Earl of Caithness.)
§ On Question, Motion agreed to.
§ Schedule 3 [Local government administration]:
§ Lord McIntosh of Haringey moved Amendment No. 91A:
Page 38, line 27, at end insert—
("(2) In subsection (2) (complaint not to be entertained unless made through a member of the authority concerned) after "unless" there shall be inserted "it is made in writing to the Local Commissioner specifying the action alleged to constitute maladministration or".")
§ The noble Lord said: My Lords, in moving this amendment I should like to speak also to Amendments Nos. 91B, 91C and 91D. While some noble Lords are leaving the Chamber perhaps I may say that the small number of noble Lords who took a close interest in the detailed proceedings on this Bill in Committee might recall that I moved two series of amendments in Committee. Both were concerned with the local ombudsman. The first group was concerned with the right to direct access to the local ombudsman and the second with powers of review of the decisions of the local ombudsman.
§ The argument which was put forward then for direct access to the local ombudsman was very straightforward. The commission for local authority administration in its reports over the years has always argued that it was an unnecessary and damaging restriction to its work that access to the ombudsman had to be through a local councillor. The great majority of local councillors are happy and ready to forward any complaint by their constituents which they consider justified, or even which they may not consider justified, to the ombudsman. However, historically there has been evidence that about 20 per cent. of councillors are not willing to do that. It seems wrong that the constituents of those councillors should in that way be denied easy access to the local authority ombudsman. These amendments have been drafted to overcome that position and to provide for complaints to be entertained if they are made in writing to the local commissioner, specifying the action alleged to constitute maladministration.
§ This need not take up very much of your Lordships' time because I acknowledge with thanks immediately that it has been indicated to me that the Government are willing to support this series of amendments. Indeed, I am grateful to the Minister and the department for assistance with the drafting of the amendments. On that basis I beg to move.
The Earl of Caithness
My Lords, I undertook in Committee to consider further the amendments tabled by the noble Lord, Lord McIntosh of Haringey, to provide members of the public with direct access to the local ombudsman rather than having to refer complaints through a member of the authority concerned, as at present.
761 That was one of the recommendations of the Widdicombe inquiry into the conduct of local authority business as well as being a change which the commissioners themselves have advocated for a number of years. I am sure that your Lordships will be pleased to hear that in our consideration of the Widdicombe Report and the many comments we have received on it we have concluded firmly in favour of direct access to the local ombudsman.
We agreed with the inquiry that the arrangements for channelled access through a member could confuse and deter complainants especially when councillors are strongly committed to their authority. Although the referral system provides an opportunity for the member to try to get complaints remedied without involving the local ombudsman, the local commissioner will continue to be required to satisfy himself that authorities have been given the opportunity to investigate and redress any complaint that he receives direct before deciding whether to conduct an investigation himself.
As the matter has now been raised by the noble Lord. there would be no point in delaying action. The amendment is an improvement on the one tabled in Committee in that it will still enable councillors to use the ombudsman to take up complaints which they have received if they wish to do so. I am sure that this is desirable and that members will want to continue to be able to become involved on behalf of their constituents in this way. The amendments will also extend direct access to Scotland as well as England and Wales. I commend them to your Lordships.
§ Baroness Serota
My Lords, I just intervene briefly to say how delighted I am to learn from the noble Earl that the Government are prepared at long last to accept this amendment. As the noble Lord, Lord McIntosh of Haringey, said, the case for direct access to the local ombudsman has been argued both inside and outside this House for some 10 years. It is certainly a great pleasure to me as founder chairman of the Commission for Local Administration to know that this improvement is now going to be made in the legislation. I must also thank the noble Lord, Lord McIntosh, and those noble Lords who have supported both this amendment and previous ones on earlier legislation in that their efforts have come to this successful conclusion.
§ On Question, amendment agreed to.
§ Lord McIntosh of Haringey moved Amendments Nos. 91B to 91D:
§ Page 38, line 31, after ("so") insert ("after "unless it was made to" there shall be inserted "the Local Commissioner or" and").
Page 40, line 14, at end insert—
("(a) in subsection (2) after "unless" there shall be inserted "it is made in writing to the Commissioner specifying the action alleged to constitute maladministration or".").
§ Page 40, line 15, after ("(4)") insert ("after "unless it was made to" there shall be inserted "the Commissioner or" and").
§ The noble Lord said: My Lords, I beg to move Amendments Nos. 91B to 91D en bloc.
§ On Question, amendments agreed to.762
§ Clause 30 [Additional powers for auditors of local authorities etc.]:
Lord McIntosh of Haringey moved Amendment No. 92:
Page 29, line 24, leave out ("two months") and insert ("one year").
§ The noble Lord said: My Lords, in moving Amendment No. 92 I shall also speak to Amendment No. 93. I wish to say in order to be helpful that the grouping which has been made available through the usual channels is not entirely rational. Amendments Nos. 92 and 93 go together. Amendments Nos. 94 and 95 go together. Amendment No. 96 does not go with any other amendment. Amendments Nos. 97 and 98 go together and Amendment No. 99 must stand alone. I apologise for not having checked this adequately in advance but the best I can do is to make that information available now.
§ The purpose of Amendments Nos. 92 and 93, which refer to Clause 30, arises from the nature of the introduction of this clause and what is now Schedule 4 at a very late stage in Committee. I protested very loudly in Committee, I am afraid, that it was quite unsatisfactory for such a major new schedule and a new clause introducing it to be introduced in the Chamber on a Bill which had already been considered fully by the House of Commons and which had very little chance of detailed consideration by Parliament as a result of its late introduction.
§ As a result of that we were able to find a little bit more time for Report and I am grateful to the usual channels for making that possible. But the fundamental objection still arises. I have put down a series of amendments to the clause and to the schedule, but I do not claim that the consideration which I have been able to give to this matter in any way matches the consideration which would have been given if the matter had taken its normal course through Committee in another place. Therefore it is still the case that in my view the clause and the schedule have been unwisely if not improperly introduced into the Bill.
§ There is a further reason for saying that, and that is that the matter of the clause and the schedule which is increasing the powers and the responsibilities above all of local authority auditors is one which was considered by the Widdicombe Committee alongside the powers and responsibilities of local authority treasurers. Widdicombe always thought that the two matters went together. Yet to our astonishment we find that the powers and responsibilities of auditors are being dealt with in this Bill, whereas the powers and responsibilities of local authority treasurers are being dealt with in the Local Government Finance Bill which is being considered in another place.
§ The purpose of these amendments is to delay the implementation of the changes to the powers and responsibilities of auditors until at least the Local Government Finance Bill has seen its way on to the statute book so that the two can properly be considered together. I still think it is wrong that we should be dealing with them separately in separate Bills and at separate times in separate Houses. That is illogical, irrational and out of line with the thinking of Widdicombe but at least it is possible to make some minor improvement by seeing to it that as 763 regards local authorities, whatever happens in Parliament, the end result takes place at the same time and can be implemented at the same time.
§ Parliamentary scrutiny of this matter, as I said, has not been adequate. The least that the Government can do under the circumstances is to make this very modest concession and help local authorities with the implementation of the changes which they require. I beg to move.
The Earl of Caithness
My Lords, we have brought the provisions in the Bill forward in advance of our response to the Widdicombe Committee's report as a whole because we see a clear and pressing need to do something in this area. I would not claim that substantial breaches of the law by authorities are a widespread occurrence. However, our concerns stem from the increasing frequency with which a small minority of authorities are running up against the law in their attempts to evade and defy duties and controls that Parliament has put in place. Our concerns also stem from the wholly unsatisfactory delays in resolving such cases and from the preference which I think many in your Lordships' House will share for prompt prevention rather than delayed retribution.
Your Lordships will be familiar with the surcharges case in Lambeth and Liverpool which arose from late rate-making in 1985. Some of your Lordships may not, however, realise that the auditor is still, some three years after the event, progressing his inquiries in four London boroughs in respect of the late rate-making in 1985. Such delays are costly. They cause frustration to those who wish to see action taken to redress wrong-doing and to bring those responsible to account. They are a source of continuing uncertainty to those directly involved.
During the past year auditors have publicly warned a number of authorities about their ability to meet future expenditure and produce lawfully balanced budgets. Such failure, auditors have warned, could well give rise to expenditure which is contrary to law and to loss occasioned by wilful misconduct.
Such developments are still small in number. They must be unwelcome to all who care for the long-term future of local government. It is in this context that these new powers are needed. The sooner they are in place the less danger there is likely to be.
New Section 25A in Schedule 4 empowers the auditor to issue a prohibition order if he has reason to believe that the authority is about to take or has taken a decision or course of action which would lead to unlawful expenditure or the making of an unlawful loss or is about to enter an unlawful item of account. These circumstances are similar to those in which provisions in Part IX of the Local Government Finance Bill seek to impose a duty on chief finance officers to report to their authorities. Those measures, foreshadowed in the Green Paper Paying for Local Government, are part of the new system of financing local government and making it more accountable to its electorate and they are provided for in that Bill.
The provisions in this Bill concerning the powers of the auditor are closely related but do not follow from the Green Paper proposals. They are not part of an authority's own financial administration but concern 764 the legal and regulatory framework in which authorities operate. However, the development of the two measures has gone forward in parallel. As I have said, they are closely related. We should normally expect the chief finance officer's report—assuming that Parliament accepts the provisions—to provide the mechanism which alerts the auditor to potential unlawfulness.
To ensure that there is consistency and that the mechanism works in practice, we propose to bring forward amendments to the Local Government Finance Bill when it comes before your Lordships' House so that the same wording is adopted as is used in this section and which is related to the circumstances in which the chief finance officer is required to make a report.
We also propose to bring forward an amendment to that Bill to require the chief finance officer to notify the auditor when he so reports, and to notify him of the meeting at which the authority is to consider his report. Your Lordships will therefore have an opportunity to debate the relationship between the provisions concerning the duties of the chief finance officer in that Bill and those which are now before us concerning the auditor.
If your Lordships or my right honourable friend the Secretary of State feel that any further consequential amendments to the present Bill are called for as a result of those considerations, then those can be brought forward. I was surprised by part of what the noble Lord, Lord McIntosh, said. On the previous four amendments he was happy to accept matters which we had put forward in advance of our report on the Widdicombe inquiry. He is not quite so keen to accept what we have put forward this time. He has asked for further concessions from the Government. He has been to the well four times and has been successful four times this afternoon. I am afraid that on the fifth occasion I must ask your Lordships to say no to him.
§ Lord McIntosh of Haringey
What a cheek, my Lords! We have closed one subject; I have made all the right noises. The amendments which I put down with the help of the draftsmen of the department followed on amendments which were debated at Committee stage. This is a totally different matter from the first consideration—which is all we have—of a long schedule and introductory clause. Certainly we were not able to debate those with any due consideration at Committee stage. As I said, even the Report stage is not a substitute for detailed consideration in Committee in another place.
However, the noble Earl has given certain undertakings concerning the wording of the Local Government Finance Bill and he has assured the House that when we come to consider that Bill it will be possible to consider the relevance of the wording both to the powers and the responsibilities of treasurers and of auditors. If this Bill has reached the statute book and its powers have come into force two months after that date, I do not immediately see how that will be possible. I shall have to think about the logic and read the words of the Minister very carefully. In those circumstances, it is appropriate that I beg leave to withdraw the amendment.
§ Amendment, by leave, withdrawn.
§ [Amendment No. 93 not moved.]