The abolition of the Audit Commission and has Morse cracked the coalition code…?

The news of the abolition of the Audit Commission was probably the first announcement from the Coalition that really shocked me.  But I guess in retrospect it shouldn't have.  Here are the tips for any other public sector organisation wanting to secure its future.

  • Don't try and pay your Chief Exec £240,000
  • Don't spend £8,000 on an event at Newmarket races
  • And most importantly, don't 'dis' your future Minister by paying £60,000 to lobbyists for advice on how to  “combat the activities of Eric Pickles”

But there are a few issues left hanging.  The BBC reports Pickles saying;

"In terms of people working for the Audit Commission, almost certainly we are looking for them to be able to continue in another form."

The Communities Department website says;

"...the Audit Commission's in-house audit practice, which is the fifth largest audit practice in the country, will be transferred out of public ownership. A range of options will be developed for converting the audit practice into a business independent of Government which could be sold or otherwise transferred into the private sector".

What does he have in mind?  A management buyout of some sort or even trade sale?  The problem with this ( and I had experience of this in terms of outsourcing service areas as a government Procurement Director back in the 90s) is that the value of the operation is wholly linked to the contracts it would bring with it.  And if councils are free to choose providers....there is no value.  Why would you take on the AC staff,  TUPE issues and so on without any guarantee of work?  You would be far better letting Government cover the cost of redundancy then pick up the best staff as new recruits when they come on the market.   Even a management buyout will have the same issues; unless there is contracted work guaranteed, it is just not a viable prospect as far as I can see.

I'm also doubtful about how much money it will save local authorities; private sector auditing firms are not noted for their rock-bottom day rates....!

The expanded role of the NAO (National Audit Office) is another interesting aspect to this.  As the Communities press release says:

Maintain auditing standards: Councils and local health bodies will still be subject to robust auditing. Protections will be developed to ensure independence, competence and quality, including audit quality regulated within a statutory framework, overseen by the National Audit Office and profession. The Commission's research activities would stop; ending duplication with others and strengthening the National Audit Office's role in this area.

I don't know if the 'research activiites' mentioned include the 'value for money' type reports that the AC produced and form a significant proportion of current NAO work, but NAO has come out of this well.  Amyas Morse seems to have done a very good job in the year or so he's been in charge; they had their own problems of course when Sir John Bourne stood down after Private Eye revelations about his expenses.  But Morse has cleverly positioned NAO; for instance, looking at their website, it is clear that they have started producing a greater quantity of 'snappier', shorter reports.  Still hard hitting and robust (like this one), but enabling then to demonstrate what is in effect higher 'productivity levels' - a sensible response to the current climate.

We may return to the broader issue of local government accountability, particularly how they spend money with third parties, at a later date.  Just as soon as I've read the latest Private Eye to get a few more examples of local authority cost consciousness...

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