This new coalition government has surprised me yet again! This time by abolishing the Audit Commission.
This is a body created in 1983 by a previous Conservative administration to monitor the performance and expenditure of publicly funded organizations. According to Eric Pickles, Local Government Secretary, it has now lost its way and grown too fat and self serving. But rather than a change of leadership and a change of diet, it is getting the chop. Clearly the £60,000 anti-pickle campaign irked him somewhat so there was going to be no reprieve when he finally got the axe in his hands.
Michael O’Higgins, the Commission’s chairman, reported
The Audit Commission’s responsibilities for overseeing and delivering local audit and inspections will stop. The Commission’s research activities will end: audit functions will be moved to the private sector, councils will be free to appoint their own independent external auditors from a more competitive and open market, and there will be a new audit framework for local health bodies. This will save council taxpayers’ money and decentralise power.
The commission’s in-house practice will be moved into the private sector – possibly through a management buy-out or as a staff-owned mutual.
So gone is low fee, high expense, public sector, critical auditing. It is to be replaced higher fee, lower expense and less critical private sector auditing.
Existing staff have been told to “form a company to bid for contracts”. So public funds will provide no doubt generous redundancy payments, then hire back the same people on a contract basis but saving the pension expenses and the fixed costs.
The question is that will these ex public servants feel some alienation and cynicism as the take on their old job with a lower salary, less security and less benefits? Will they do a better or worse job of monitoring the expenditure of public finances?
Will they protect public expenditure in the same way that auditors protected shareholders of the banks? Except that in this case the public have less control than shareholders over the appointment of auditors.
In my opinion the likely outcome is lower costs in the short term and bigger scandals in the longer term.
A change of leadership and a trimming of fat would have cost less in the short term and likely brought longer term benefits through economies of scale and reduced scope for corruption.
This decision to kill off the Audit Commission just looks to have been made for personal rather than practical reasons.