35.At paragraph 7.39 of the English White Paper (paragraph 7.53 in Wales), the Government states its belief that, whilst annual audit arrangements of the type described above will be an important form of scrutiny, in themselves they will not always deliver the degree of rigour which the policy requires. It has therefore, within section 10, provided the Audit Commission with a power to carry out inspections aimed at assessing the degree to which authorities comply with the requirements of the best value legal framework.
36.In many cases, these inspections will be programmed so as to allow the inspectors to assess the outcome of reviews under section 5 which are considered above. Paragraph 7.42 of the English White Paper (7.60 in Wales) describes some of the purposes of inspections, which include:
	checking that reviews have been carried out in accordance with legislation and statutory guidance;
	assessing whether the performance targets set for future years are sufficiently challenging to obtain best value.
37.In some cases, however, the Government will wish to provide for ad hoc unprogrammed inspections to take place. This might, for instance, be the case where the standard of performance of a function within a best value authority is considered to be well below that required, and there are no immediate plans within the authority to review the function in question. Section 10 provides the Secretary of State with a power to direct the Audit Commission to carry out an inspection of the authority concerned in respect of those functions.
38.The Government intends that the Commission’s powers of access to documents and information should be broadly similar to those enjoyed by auditors of accounts, and which are provided under section 6 of the Audit Commission Act 1998. Section 11 provides for this, and also for inspectors to have reasonable rights of access to premises. This latter provision goes beyond the powers of auditors in the 1998 Act, but it is included to take account of the fact that the ability to conduct an inspection of a function such as housing might be seriously inhibited if the inspector were not able to inspect, for example, the manner in which housing repairs were managed and carried out in the authority in question.
39.Section 12 sets out the new powers which the Audit Commission will have to set a scale of fees for best value inspections. This power complements the powers it has to set scales of fees for best value audits, which are set out at section 8. In addition, the Commission will have discretion to charge a fee which departs from any such scale where it judges the amount of work involved in an inspection to be substantially more or less than normal. Before setting a scale of fees, the Commission is required to consult both the Secretary of State and persons which it judges to be representative of best value authorities.
40.As with the audit of plans, whenever inspectors scrutinise reviews the Audit Commission will be expected to publish a report outlining their findings. The sequence of events which follows, and which is provided for at section 13, will vary according to the nature of the findings.
41.In all cases, the Commission will send a copy of its report to the relevant best value authority. Where the report identifies matters in respect of which the Commission believes the authority is failing to comply with duty of best value but which are not considered to be serious enough to be referred to the Secretary of State, then, as is provided for in respect of the audit of Local Performance Plans, the authority will be required to record the failure and the action taken in respect of it within the following Local Performance Plan.
42.Conversely, where an inspection discloses serious failure to comply with the duty which leads to the Commission recommending action by the Secretary of State, then the report will also be sent to the Secretary of State as well as to the authority, and will constitute one of the objective triggers upon which enforcement action, dealt with by section 15, might be based. It will be open to the Commission, in deciding upon whether to recommend intervention, to further recommend to the Secretary of State what the appropriate form of intervention might be.
43.The Government stated at paragraph 7.48 of the English White Paper that it intended that any intervention by Ministers would be based upon objective triggers. These will include not only reports by auditor and inspectors appointed by Commission, but also other forms of inspection activity, including those undertaken by the Social Services Inspectorate, OFSTED (OHMCI in Wales), Her Majesty’s Inspectorate of Constabulary, the Benefit and Fraud Inspectorate, and the Fire Inspectorate. They will also include information from other sources which give the Secretary of State concern about whether an authority is meeting the duty of best value. A very serious example of this might be where a child is harmed or put at risk whilst in local authority care; this might give the Secretary of State legitimate concern about the effectiveness of the Social Services Department of the authority in question, such that he may wish to order the authority to immediately review its operation of the function pursuant to section 5—or perhaps, as is provided for by section 15, to order an immediate inquiry.
44.Section 14 amends sections 139A(1), 139A(2) and 139C(1) of the Social Security Administration Act 1992. These provisions set out the powers of authorised inspectors to inspect and report upon authorities’ performance in the administration of housing benefit and council tax benefit, and their performance in the prevention and detection of fraud. Section 14 adds a further provision which allows such inspectors to also inspect and report upon such authorities’ compliance with the requirements of best value, as set out in Part I of this Act.
45.Section 15 offers the Secretary of State a wide range of intervention powers in response to failures. These include some which are of a procedural nature, and others which involve more substantive action either on the part of the authority (where, for example, it might be required to externalise a function), or on the part of the Secretary of State (who might, in extreme cases of failure, intervene to exercise a function of the authority himself or through a nominee). In any case, where the Secretary of State intends to take action against an authority based upon recommendations of inspectors, he will normally be required to allow the relevant authority to make representations both about the recommendation itself, and the action which is proposed in respect of it.
46.In some cases, however, the Secretary of State may judge the failure so serious, or the immediate risk to sections of the community so great, that he may wish to intervene directly without waiting to consider any representations which the best value authority concerned might wish to make. In such exceptional circumstances, a possible example of which is set out at paragraph 43 above, subsection 15(11) allows the Secretary of State to give a direction to the best value authority without allowing an interval for representations such as is set out at subsections 15(9) and 15(10). However, if the Secretary of State chooses to use his powers under subsection 15(11), he will be obliged to inform both the authority concerned and any appropriate representative body of both the direction, and the reason why it was given, without recourse to the normal procedure allowed for by subsections 15(9) and (10).
47.In cases where the Secretary of State intervenes directly in a best value authority, and in doing so assumes responsibility for delivering a function, subsection 15(7) provides him with a regulatory power which can be used to make alternative provision to address circumstances where he intervenes in a function which already provides recourse to him, either through appeal or otherwise. This regulatory power could also be used where the Secretary of State has an existing role or power in relation to a best value authority. The power could be used, for instance, in situations where the Secretary of State intervened to take over a planning function where there was a pre-existing right of appeal to him. In such a case, subsection 15(7) would allow the Secretary of State to make alternative provision to ensure that individual’s rights were properly protected, and to prevent situations arising where the Secretary of State was involved not only in the taking of decisions but also the hearing of appeals against them
Commentary on Sections Part I: Best Value Sections 10-15: Best value inspections and intervention