Committee on Standards in Public Life (Hansard, 7 March 1996)

§ Mr. Freeman

The Government have published a consultation paper, "Spending Public Money: Governance and Audit Issues", Cm 3179, which has been laid in both Houses. The paper covers executive non-departmental public bodies, NHS bodies and local government and, as regards audit arrangements, what the Nolan committee has called local public spending bodies. Comments have been invited to a 14 June deadline.

The proposals on personal accountability include a more consistent way of handling conflicts of interest on the part of board members. Codes of conduct are planned for staff of executive NDPBs and NHS bodies. NDPB and NHS board members will be protected from the costs of personal civil liability on certain conditions. The proposals make it clear that executive NDPB accounting officers, working under their boards, are responsible for propriety in a broad sense, as Nolan recommended. The Government are not persuaded that provisions similar to surcharging in local government should be extended into areas where other sanctions, including the power of dismissal, are available. Further guidance is being provided on openness, taking account of the Nolan committee's standard of best practice as appropriate. Executive NDPBs should make records of decisions available wherever possible, and should publish reports containing at least a summary of their accounts. The Comptroller and Auditor General is encouraged to develop systematic work on comparative performance.

External audit arrangements should support lines of accountability and include an emphasis on regularity and value for money. There should be an element independent of the audited body involved in setting standards, defining audit practice and laying down reporting requirements. Duplication should be avoided. Reports should be addressed outside the audited body on major issues arising from the audit. The Government will ensure that the Comptroller and Auditor General has inspection rights over all executive NDPBs which he does not audit. He has a key role where Parliament has established Ministers' accountability through legislation; elsewhere, other arrangements are likely to provide better support of accountability. The Government accept the Nolan committee's recommendation that the Audit Commission should be able at its own discretion to publish public interest reports on NHS bodies.

Funding bodies should ensure that bodies receiving grants have adequate financial control arrangements. Education and housing funding bodies should as a matter of good practice require external auditors of bodies which they fund to report to them immediately if they find serious financial weakness or irregularity. They should consider ways in which they can draw on the expertise of the national audit agencies on audit arrangements and value-for-money work.

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The paper proposes that the audit agencies, acting together, should commission an independent review of the interface between them. The paper gives examples of cases where public bodies audited by the Comptroller and Auditor General should ensure that he has appropriate access to contractors' records. He is invited to consider letting private sector firms compete with NAO audit staff to undertake certain audits, without affecting his statutory position as auditor.

The Government intend to consult further on the most suitable arrangements for the external audit of local authorities and health bodies in Northern Ireland.

The differences between sectors mean that imposing a single, uniform structure would require large-scale changes in their relationships with Parliament, requiring major legislation. The Government believe that the best way forward is to build on, and spread, good practice.