15 March 2002
Thirteen months after the Liberal Democrat peer called for the National Audit Office to be given the 'right to roam', Chief Secretary to the Treasury Andrew Smith told Parliament on March 13 that the government accepted his conclusions.
The news will put an end to a long-running battle across Whitehall and is a major boost to the authority of the public spending watchdog. It will now be allowed to order a range of public and private bodies that receive state funds, such as Private Finance Initiative contractors and non-departmental public bodies (NDPBs), to open their books to its auditors.
Smith told MPs that Sharman had laid out the way forward for audit and accountability in the twenty-first century. 'We have accepted all his recommendations directed mainly to the government, either in their entirety or in principle, and support his recommendations directed to other bodies,' he added.
The decision means that the NAO's comptroller and auditor general, Sir John Bourn, will be appointed auditor of all NDPBs, and will enjoy a statutory right of access to government contractors and other bodies involved in delivering public services.
Edward Leigh, the Conservative chair of the Public Accounts Committee, through which the NAO reports to Parliament, gave the decision an enthusiastic welcome.
'The government's response to Lord Sharman's recommendations represents an important milestone on the road to improved accountability,' he said. 'The points of detail are underpinned by the acceptance of the principle that all public spending, by whatever vehicle, should be subject to Parliamentary scrutiny.'
In public, the NAO was giving away little following Smith's statement. A spokeswoman would only say: 'We very much welcome the government's response.' But in private, officials will be pleased that they have won the long-standing struggle for more powers.
The watchdog will also be involved in policing the Public Service Agreements struck between the Treasury and other government departments, which set performance targets to be met in return for funds.
But it will audit only the way in which performance data are collected, not the data as such, in contrast to the Audit Commission's approach in local government.
The Sharman report was clear that in the long-term the published data should also be scrutinised. Nevertheless, NAO officials are believed to regard the move as an important first step towards policing the entire PSA system.
Treasury officials have been working closely with the body to put together the framework that will govern the new arrangements. Although no timetable has been outlined, the changes are expected to be introduced in months.
PFmar2002
