Lord Sikka (Lab)

My Lords, the local authority audit system was wrecked by the previous Government. Electoral Commission data shows that in the period leading to the 2010 general election big accounting firms handed millions of pounds in cash and non-cash donations to the Conservative Party and got their wish, which was the abolition of the Audit Commission. The commission used to make considerable use of the district auditor service, as has been mentioned, and was reluctant to award auditor appointments to big accounting firms as they were not really considered to be fit for the purpose. The commission was a watchdog and a guide dog as it focused on efficiency and effectiveness and guaranteed auditor independence. Since then, we have had several local authority scandals, but big accounting firms have continued to collect millions of pounds in audit fees. I look forward to the English Devolution and Community Empowerment Bill when it comes, but meanwhile I have a number of concerns about local authority audit matters. The Government’s 9 April 2025 paper Local Audit Reform: A Strategy for Overhauling the Local Audit System in England stated: “Audited accounts are a vital and independent source of evidence of the sector’s financial health and value for money for residents, local bodies and elected members”. It adds that audit provides, “the only independent check on whether local bodies’ financial statements are true and fair. This is vital not only for good decision-making but for transparency and to enable local communities to hold their councils and other local bodies to account”. However the statutory instrument in front of us actually dilutes the audit requirements for smaller authorities. Can the Minister explain how the Government’s claims of an “independent check” and “transparency” will be delivered in the absence of independent scrutiny, which the Minister just praised?