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Second Standing Committee on Delegated Legislation
Monday 21 June 2004
[Mr. Kevin Hughes in the Chair]
Draft Government Resources and Accounts Act 2000 (Audit of Health Service Bodies) Order 2004
4.30 pm
The Financial Secretary to the Treasury (Ruth Kelly): I beg to move,
That the Committee has considered the draft Government Resources and Accounts Act 2000 (Audit of Health Service Bodies) Order 2004.
The Chairman: With this it will be convenient to consider the draft Government Resources and Accounts Act 2000 (Audit of Public Bodies) Order 2004.
Ruth Kelly: I am delighted to welcome you to the Chair, Mr. Hughes. I have not had the pleasure of serving under your chairmanship, and I very much look forward to it.
Last year, the Government implemented Lord Sharman's key recommendations on audit and accountability in central Government. In particular, we responded to concerns expressed in Parliament by strengthening the statutory powers of the Comptroller and Auditor General in two ways. First, we made him statutory auditor of certain non-departmental public bodies of which he was not already the statutory auditor. Secondly, we gave him greater powers of access. The Government Resources and Accounts Act 2000 (Audit of Public Bodies) Order 2004 is intended to continue the process that Parliament approved last year. The order is being made under the Government Resources and Accounts Act 2000 and was laid on 7 June.
Similarly, the Government Resources and Accounts Act 2000 (Audit of Health Service Bodies) Order 2004 was laid on 7 June and is also being made under the 2000 Act. It is intended to make the Comptroller and Auditor General the statutory auditor for four new special health authorities. In conjunction with an accompanying order made under the negative resolution procedure, which was laid on 24 May, it will ease the audit burden on those authorities and the Department of Health, while maintaining full parliamentary accountability. I am grateful for the assistance that we received from the National Audit Office throughout the process of preparing the orders.
The audit of public bodies order provides for the Comptroller and Auditor General to be made the statutory auditor for the Hearing Aid Council, which currently appoints its own auditors. The order also takes account of developments in respect of the Sea Fish Industry Authority.
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The audit of health service bodies order deals with the audit of four new special health authorities and was prepared in consultation with the Department of Health. Those special health authorities are the National Health Service university, NHS Direct, NHS Professionals and the NHS Pensions Agency. The previous arrangements required two sets of accounts to be prepared for each special health authority: one by the authority itself, and the other by the Department of Health. In effect, each authority is audited twice: once by the auditors appointed by the Audit Commission, and once by the Comptroller and Auditor General. The order is intended to put the four new special health authorities on a par with all other such authorities by making the Comptroller and Auditor General the statutory auditor of special health authorities, in place of the Audit Commission, thus avoiding the dual audit burden.
The proposals continue the Government's commitment to improved parliamentary accountability, and I commend the orders to the Committee.
4.34 pm
Mr. Andrew Tyrie (Chichester) (Con): Had the Minister given a longer speech—she was right not to do so—she might have explained in more detail that our key purpose is to remove a double audit burden. That is a sensible thing to do, and it should result in a cost saving—another sensible thing. I have a few practical questions about the orders.
First, what is the scale of the cost saving? I have given the Minister a moment or two's advance notice of my other three questions. It may not have been enough time for her to be sure of having the answers at her fingertips, but she may be able to make a few suggestions. Secondly, as the legislation is drafted, it seems that we shall be going round this circuit every year, or at least every time another of these new bodies comes into being. I wonder whether that is necessary if there is no dispute about the principle. If not, will the Minister consider framing legislation that would enable us to avoid that if we were confident that there was no need for this level of scrutiny?
Thirdly, I note that the regulatory impact assessment for the 2003 order acknowledged
''a concern on the part of some Special Health Authorities about a potential loss of continuity of audit experience and a potential increase in costs for the bodies themselves.''
That was a consequence of the introduction of the new approach, with the Comptroller and Auditor General being so much more heavily involved. Have the Government studied the impact of the 2003 order? Were fears about its transitional impact realised? Was the Comptroller and Auditor General's expertise sufficient to ensure continuity?
Did the fees increase or decrease? That brings us back to the question of cost: if there is one audit rather than two, it should result in a saving. In the context of the audit that the Comptroller and Auditor General is now replacing, was there a saving? Did fees go up or down? If the Minister cannot answer now, will she at least give us some indication on those points?
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My last question relates to fraud. One of the main purposes of having an audit is to clamp down on fraud. If one thought that fraud would not occur, the case for an audit would be sharply reduced, but there is a lot of fraud in the NHS. I shall not stray too far from the subject of the orders, but I shall allude briefly to one or two examples that relate directly to previous orders. For example, when the NHS counter fraud and security management service introduced anti-fraud measures, the cost of dentists' claims for extra patient visits dropped from £14 million to £8 million. That suggests that about 40 per cent. of their claims were fraudulent.
Another example is the number of travel expense claims made in the NHS every year. According to figures published in Hansard, a third of a million pounds' worth of travel claims are fraudulent. I have a raft of other examples, big and small. Wherever one looks in the NHS there is quite a lot of fraud, even though the overall level is falling. What impact, if any, will the orders have on fraud? Does the Minister believe that there is a risk that the reduction in accounting and auditing requirements on special health authorities could lead to an increase? I would be grateful if she responded to those four points: cost, discontinuity, going around the circuit every year and fraud.
4.40 pm
Norman Lamb (North Norfolk) (LD): It is a pleasure to serve under your chairmanship, Mr. Hughes. I hope to be very brief.
The Government, entirely sensibly, followed Lord Sharman's recommendations, and the principle behind the proposals was established last year in respect of other bodies, so I shall not dwell on it. There is, however, concern that yet more non-departmental public bodies are being established. Indeed, here are another four that relate to health. Following the point made by the hon. Member for Chichester (Mr. Tyrie), does the Minister have anything to say about the fact that we will have to keep returning to this issue every time an extra NDPB is established? One wonders when this continual burgeoning of such bodies will end.
My main points relate to the lack of a regulatory impact assessment. The explanatory note makes it clear that the regulatory impact assessment produced for each order last year established that there were no real extra costs and that the Departments would succeed in making savings. However, a flaw in the process is that, once a measure has been introduced, there is no means of determining whether the regulatory impact assessment produced before the measure came into effect has been proved.
Several questions arise. Has experience shown that last year's orders have had any effect? What was their impact? Was there no increase in fees, as predicted? Has the audit burden increased? Have the costs to the Department of Health reduced as a result of the health orders? Reference was made to the Comptroller and Auditor General's assurance that he would contract out the same number of additional audits that
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Departments currently award to private firms. Has that happened, or has that assurance not been acted on?
I should be interested to know what the Hearing Aid Council actually does; I confess that I had not come across it until now. Will the Minister tell us its purpose? My main concern, however, is the lack of a regulatory impact assessment and of a review after last year's assessment. I await the Minister's response with interest.
4.43 pm
Ruth Kelly: Perhaps I can start by telling the Committee all about the Hearing Aid Council. The council was established in 1968 to set and maintain standards of competence and conduct for registering hearing aid dispensers and their employers. It was reclassified as a non-departmental public body with effect from 1 April 2003. It was intended that the council would transfer from the Department of Trade and Industry to the Department of Health in due course.
It might be worth my putting the orders into context before I respond to other points that have been made. Last year, the Government made orders in support of their response to Lord Sharman's report, ''Holding to Account''. One of the orders provided that the Comptroller and Auditor General would be the auditor of all non-departmental public bodies other than those incorporated under the Companies Act 1989. Another order granted the Comptroller and Auditor General access rights to certain documents for the purpose of carrying out audits. The Government welcomed the commitments made by the Comptroller and Auditor General, who provided assurances that his new powers would not be used in way that increased burdens and that the National Audit Office would introduce new arrangements to ensure high quality service in the absence of competitive tendering arrangements. I am pleased to tell the Committee that the Government have received very few complaints in that regard about audits by the Comptroller and Auditor General in the past year.
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