Government audits and accountability to come under scrutiny in new probe

Chief Secretary Andrew Smith had promised ‘an historic opportunity to look more widely at the whole question of audit, access and validation’ in a formal written statement in the Commons.

But he limited the scope of a semi-independent review to ‘central government’ – seen as a deliberate bid to rule out closer scrutiny of the increasing numbers of government-owned companies set up to deliver services in public/private partnerships.

The move follows Treasury ministers’ flat refusal of Public Accounts Committee’s proposed amendments to the Bill giving Comptroller and Auditor General Sir John Bourne the right to follow taxpayers’ money wherever it is spent – including arms-length companies – and audit Government performance targets.

They wielded Labour’s huge Commons majority to vote down a series of proposals from Chairman David Davis and senior Labour PAC member Alan Williams.

Ministers insisted the bill was designed to facilitate the change to resource accounting and the public/private partnership initiative, not change audit arrangements.

A special PAC report also attacked the failure of the Government to allow the Bill to be used as a vehicle to extend the remit of the National Audit Office.The semi-reformed Lords – which has already used its new-found authority to defeat key government measures over matters of principle, like a free delivery of election addresses for London Mayor candidates – has been belately recognised by the Treasury as potential threat.

Rebellious peers may be willing to insert some of the PAC clauses their built-in majority defeated in the Commons.

Smith rushed out his statement after the Bill completed its passage throiugh the Commons earlier this month and before it started in the upper chamber.

The Treasury said he ‘proposed that a study be set up to recommend suitable audit and accountability arrangements for central government in the 21st century’.

Smith told MPs: ‘This is a great opportunity for parliament and government to work together to make sure transparency and accountability go hand in hand with the modernising gvernment agenda.’

His statement said the review will also cover audit/validation of performance measures, the implications of devolution, the wider European context, with particular reference to European Directives said to ban the C&AG from auditing government-owned companies, possible models from other countries and the relationship with other audit and regulatory bodies.

Smith said he was ‘keenly aware of the importance of Parliament’s rights and its interest in scrutiny, accountability and control of expenditure’.

He promissed that the project board to deliver a study of these issues will have an independent chair. But did not guarantee independence for the majority on the board not on the steering group directing it.

MPs are deeply suspicious that the Treasury is keen to keep the C&AG and the PAC at arms length. Senior members of the PAC have been in talks with Treasury ministers.

Alarm raised over public sector’s readiness for new accounting regime

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