Archive for August 17, 2010

The abolition of the Audit Commission

August 17, 2010

It was announced on Friday that the Government wanted to abolish the Audit Commission.

Many in Local Government were outraged; some argued that the Audit Commission was already a lean organisation that was delivering a very efficient service (Heather Wakefield from Unison); others argued that the Audit Commission provided a public sector audit service which would be impossible to achieve in the private sector; and the Chairman of the Audit Commission pointed out that it had “more than fulfilled” the goals set out for it.

I did not shed a tear. The Audit Commission had become a tool of terror wielded by overweening central Government against supposedly recalcitrant local authorities. However, that was not all it did. The AC developed policy, lobbied the Government on behalf of local Government, produced best practice guides and Value for Money tools, audited performance and effectiveness as well as accounts and developed funky websites that no-one would read (see oneplace).

In summary, the Audit Commission grew and grew, taking on more powers and responsibilities and finding ways to have a role in whichever new policy the Government of the day wanted to pursue. With this came well paid Chairmen, communications officers and all the trappings of the modern QUANGO; all paid for by the public purse. How much of their budget was actually spent on auditing the accounts of local authorities I can only guess.

So yes, I welcome the general tenet of the announcement by Mr Pickles.

However, and this is a big however, does the medicine fit the disease? Yes, the Audit Commission was pursuing the wrong aims but simply hiving audit work off to the private sector may not be the long-term solution local authorities need.

As I see it Mr Pickles had two choices.

1) He could have simply stopped the Audit Commission from doing all of the other work it currently did and return it to being a public sector auditor. This would probably have saved most of the full £50 million Mr Pickles has identified and maintain a valuable public sector audit resource.

2) He could abolish the Audit Commission and privatise local government audit.

Short term option 2) is probably easier and looks simpler. Unravelling a behemoth like the Audit Commission would have been a pain and would have taken time. However, privatising audit will probably end up increasing costs for local authorities; not in real terms but over what it would have cost had the Audit Commission stuck to auditing. In addition, private providers will not have the public accountability that the Audit Commission did.

In 5-10 years I bet that some future Government will decide to invent a small public sector body that can provide cheaper cost audit to local authorities; in fact local authorities might even work together to create one themselves.

I commend Mr Pickles for making a tough decision to abolish the Audit Commission but am afraid that he has also ducked the tougher option of reforming the Audit Commission and providing the sort of public sector audit we all need.