Audit Committee, 26 Sep 2006
Meeting date: Tuesday, September 26, 2006
Official Report
224KB pdf
Subordinate Legislation
Construction Contracts (Scotland) Exclusion Amendment Order 2006 (Draft)
We move on to agenda item 8. We will take agenda items 6 and 7 afterwards.
Agenda item 8 is consideration of the draft Construction Contracts (Scotland) Exclusion Amendment Order 2006. Members have copies of the draft order, the accompanying explanatory note from the Executive and the relevant report from the Subordinate Legislation Committee. I welcome to the meeting Tom McCabe, the Minister for Finance and Public Service Reform, and his officials. Lawrie Anderson is a senior policy adviser and Andrew Caskie is a senior project adviser; both are from the Finance and Central Services Department.
For the benefit of members of the public and the press, I will explain how the draft order will be dealt with. I will ask the minister to introduce it and will then ask members whether there are any issues relating to it that they wish to clarify before any formal debate begins. Members are asked to note that that is the point at which they should ask any technical questions on the draft order in order that officials can respond, as officials cannot participate in any formal debate. I will also invite the Auditor General to raise a point of clarification in relation to the Auditor General's relationship with the draft order.
Once clarification has been given, or if members do not have any questions, I will ask whether any member wishes to debate the draft order. The minister will open any debate by moving motion S2M-4735, that the committee recommends that the draft order be approved. Finally, I will put the question on the motion.
I welcome the minister and ask him to introduce the draft Construction Contracts (Scotland) Exclusion Amendment Order 2006.
Good morning. Thank you for giving me the opportunity to come along and say a few words on the draft order. I ask the committee to support the motion and therefore to recommend approval of the draft order, which amends the Construction Contracts (Scotland) Exclusion Amendment Order 1998. If the draft order is approved, the change will bring consistency in the arrangements for the construction industry and will align the arrangements in Scotland with those that are already in place south of the border.
The Housing Grants, Construction and Regeneration Act 1996 requires construction contracts to include provisions to ensure the prompt payment of contractors and speedy adjudication of disputes. Section 106 confers powers on the secretary of state to exclude, by an order, certain categories of contract from the operation of that act. Following devolution, that power is now exercisable by the Scottish ministers. We consider that we need to revise the definition in article 4(2)(c) of the Construction Contracts (Scotland) Exclusion Order 1998—which sets out the public bodies that are excluded—to ensure that the definition reflects the current accounting and audit arrangements for Scotland.
Sub-subparagraphs (ii) to (iv) of article 4(2)(c) exclude bodies by reference to the accounting and audit treatment of those bodies. However, following devolution, the accounting and audit arrangements in the public sector generally were altered so that the National Audit Office no longer dealt with the accounts of Scottish devolved bodies. The intention of the draft order is that all such contracts that public sector bodies in Scotland award should be excluded from complying with the requirements in part II of the 1996 act. The exclusion for bodies in the Scottish public sector will be achieved by adding to article 4(2)(c) those bodies whose accounts are audited by auditors who are appointed by the Auditor General for Scotland.
The draft order is technical. I ask the committee to support the motion to introduce parity of approach for the construction industry.
I invite the Auditor General to make any comments.
In essence, the draft order uses the audit arrangements for contracting parties as one way in which to define excluded contracts. There is no impact whatever on my auditing powers. Therefore, the proposal seems entirely reasonable and I have no difficulty with it.
I have no difficulty at all with the proposals, but I have a general question. As the minister is here, I will draw upon his knowledge. I am curious about why the draft order has come before us now, as there must have been earlier stages in the devolution process at which similar changes were needed to reflect the changed arrangements.
That is absolutely right. In essence, the issue was missed at devolution. The anomaly that I have explained came to light during the on-going review of the construction contracts arrangements. We felt that we should correct it as soon as possible.
As there are no more questions, do members wish to debate the draft order?
No.
Okay. I invite the minister to move motion S2M-4735.
Motion moved,
That the Audit Committee recommends that the draft Construction Contracts (Scotland) Exclusion Amendment Order 2006 be approved.—[Mr Tom McCabe.]
Motion agreed to.
I thank the minister and his advisers for their time.