Audit Commission disbanded after "losing its way"
The Audit Commission is to be disbanded with its auditing functions handed to the private sector and councils given the freedom to appoint their own independent external auditors, the Department for Communities and Local Government has announced.
Under the proposals:
- The Commission’s responsibilities for overseeing and delivering local audit and inspections will stop. Its research activities will also end
- A range of options will be considered for converting the Commission’s audit practice into an independent business that could compete with or be sold or transferred to the private sector
- A new decentralised audit regime will be established in the Commission’s place, and this will apply to local authorities, police authorities and local health bodies
- The powers of the Local Government Ombudsman will be strengthened to give residents greater rights when local services go wrong. The LGO’s findings will be made legally enforceable
- A statutory framework, overseen by the National Audit Office and profession, will provide protections and ensure independence, competence and quality, including audit quality
- Inspection and intervention will remain “for the most vulnerable to protect public welfare”, including children’s services and adult social care
- District auditors will retain a duty for reporting issues in the public interest. “They will be able to undertake special investigations where they, the local government sector or any continuing inspectorates such as Ofsted in the case of children's services, or Care Quality Commission on adult social care, raise concerns about a council,” the DCLG said.
The necessary legislation will be sought in this Parliamentary session, with a view to the new regime being in place by 2012/13.
The DCLG said ministers had been concerned that the Commission’s work had become less focused on accountability to citizens and more on reporting upwards to government.
Communities Secretary Eric Pickles said: “The corporate centre of the Audit Commission has lost its way. Rather than being a watchdog that champions taxpayers’ interests, it has become a creature of the Whitehall state.
“We need to redress this balance. Audit should remain to ensure taxpayers’ money is properly spent, but this can be done in a competitive environment, drawing on professional audit expertise across the country.”
He added that scrapping the Audit Commission would save the taxpayer £50m a year.
Michael O'Higgins, the Commission's chairman, said it regretted the decision but acknowledged the absolute right of the Communities Secretary to change the arrangements surrounding the architecture of government.
He insisted that it could reflect upon “the very significant successes” it had achieved during its existence. Among the successes he highlighted:
- The Commission-led investigation of the rate-capping rebellion which resulted in 32 Lambeth councillors and 47 Liverpool councillors being surcharged and banned from office
- The uncovering of the gerrymandering 'homes for votes' scandal at Westminster Council
- The corporate governance inspection of Doncaster Council in 2010 in the light of "serious concerns about the council's performance and the threat to public confidence caused by recent events", namely the brutal attack on two boys by two brothers in Edlington
- Its National Fraud Initiative, which has detected more than £200 million of fraud.
O’Higgins also argued that the Commission had played its part in assisting in the “very significant” impact of local authority improvement in the last decade. He pointed to the Decentralisation Minister Greg Clark’s comments comparing local government’s improved performance compared to central government.
The Commission’s chairman said he had taken soundings of potential purchasers of its audit practice, which had revealed significant interest in acquiring the business.
