Contribution
My Lords, I will speak to Amendments 243, 249 and 250 in the name of my noble friend Lord Shipley, who regrets that he is unable to be with us today. We on these Benches absolutely understand why the Government have created this new entity of the local audit office in the Bill, but we will still listen with interest to the arguments put forward by the noble Lord, Lord Jamieson, and the noble Baroness, Lady Scott of Bybrook, on Clause 74. However, I believe that our concerns are different. These amendments speak directly to a problem that the Committee fully understands all too well: what happens when power runs ahead of scrutiny.
Amendment 243 is an early warning: it would require the local audit office to take immediate notice of serious management concerns raised by local audit committees. This is not an abstract concern. We have seen authorities where internal warnings were repeatedly raised about governance, liabilities or control systems, yet decisive action was delayed until failure became unavoidable. Audit that intervenes only after a Section 114 notice is not an oversight; it becomes a post-mortem.
I speak from bitter experience. When I was a councillor in opposition, we had our accounts disclaimed for two years on the trot. Apparently, this had never happened to any local authority before; we were not aware of it and we did not even know what the word meant until the auditor himself took the unprecedented step of breaking the story to the local Watford Observer—hence my passion to make this system work.
Analysing all those past failures, I find that they were not accidental. They were often accompanied by a pattern of executive overreach. Major decisions were taken at pace, scrutiny bodies were sidelined and challenge was treated as obstruction rather than protection. In some cases, significant financial commitments were entered into through mayor-led vehicles with limited transparency, optimistic assumptions and weak democratic oversight. In others, scrutiny committees raised concerns only to find themselves ignored, overridden or marginalised.
Amendments 249 and 250 are to deal with what happens next. They would ensure that audit scrutiny extends not only to money already spent but to how resources are planned to be used. They would allow serious findings to be made public where the audit committee considers this to be in the public interest.
Past failures were not hidden in the accounts; they were embedded in business plans, regeneration strategies and commercial ventures that were never properly stress-tested. Audit that cannot interrogate those plans early and that cannot speak publicly when necessary is simply too weak for the system that the Bill is creating.
This brings me to the local audit office itself. Done well, it could be a real asset. It could provide consistency, expertise, early challenge and a clear line of sight across a fragmented audit landscape. It could join up intelligence, spot emerging risks and give local leaders, mayors and central government the confidence that problems will be confronted early, rather than quietly managed until they explode.
We must be honest about the starting point—where we are now. The current local audit system is not working as it should, and I am absolutely certain that the Minister is aware of that. Audits are delayed, capacity is stretched and expertise is uneven. Serious concerns too often circulate without traction. The danger is that we create a local audit office in name but not in reality—an institution with responsibility but insufficient muscle.
This is now coming to the heart of our concerns, and this is what makes it more pertinent. The new system deliberately concentrates power in the hands of directly elected mayors over strategic planning, major investment decisions, long-term borrowing and delivery bodies operating at arm’s length. That concentration of power may deliver momentum, but it also magnifies risk when challenge is weak.