Lord Falconer's Bill has been defeated in the House of Lords
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The Lord Chancellor's proposals to make selection of judges fairer and more transparent have been criticised as "wrong-headed" by his own watchdog.
Lord Falconer's Constitutional Reform Bill plans to create a new body to appoint over 2,000 judges each year.
But it will not audit the appointments and ministers will have a veto.
"It could end up perpetuating current weaknesses in the appointment process," Sir Colin Campbell, of the Commission for Judicial Appointments (CJA), said.
Currently judges are selected by an internal bureaucratic process in the Department for Constitutional Affairs.
'Ballast'
The new system would remove this bureaucracy to an independent body called the Judicial Appointments Commission (JAC).
As part of this process, the CJA, set up as a temporary body to inspect judicial appointments and recommend changes to the system, would be disbanded.
In their annual report, the CJA said the new set-up would remove a "confidence-inspiring, independent guarantee of fairness".
The government has followed many of the CJA's recommendations in the Bill but Sir Colin, chairman of the commission, believes there is no audit function in the new system.
He said: "Just as the CJA's audit role has been the catalyst for the reorganisation of the existing system, so a future audit function would serve to keep the new body 'honest' and provide 'ballast' for the JAC against any interest tempted to exert pressure on it.
"At its worst, the new appointments system could end up looking a lot like
the existing system, only without oversight."
Ombudsman
But the Department for Constitutional Affairs says the new body will answer to parliament and will have the necessary oversight.
A spokeswoman said: "The commissioners will make regular reports and will be regulated by an ombudsman.
"And there is nothing to stop the National Audit Office from auditing the financial aspects of the new commission."
The ombudsman will also handle complaints about judicial appointments and the personal conduct of judges, she said.
"We believe that the new appointments system will be sufficiently open and transparent to preclude the need for this form of oversight," she added.
The Bill has previously been rejected by the House of Lords because they disagreed with the proposal to abolish the position of Lord Chancellor.
The government hopes it will become law early next year.