Quality | 2010.08.13
Audit Commission to be scrapped
Commission accused of \'shocking excesses\' and staff told to form company to bid for contracts
The Audit Commission, the independent spending watchdog tasked with scrutinising local government, became the highest-profile victim of the government\'s austerity drive tonight as Eric Pickles, the communities secretary, announced that he was scrapping it.
The commission, which cost £200m a year to run and which was key to uncovering the scandal at Shirley Porter\'s Westminster council in the 1980s, had the job of overseeing how local government and the NHS in England spends £200bn.
The organisation\'s 2,000 staff were informed by their management today, some reportedly by email. Management appeared to rush out the news with little varnish when they learned Pickles would be making his own announcement on their future in a newspaper interview tomorrow.
Pickles\' first explanation of his decision emerged on the Telegraph\'s website today, where it trailed quotes from the interview due to run tomorrow. The cabinet minister explained he was closing the watchdog down on account of a decade of "shocking excess".
In a leaked memo to staff, Eugene Sullivan, chief executive, questioned the thinking behind the decision and its manner, saying to staff: "I am surprised by this decision. The decision has been taken without any consultation with the commission on the principles involved, especially that of the independent appointment of auditors."
Dai Hudd, deputy general secretary of the Prospect union which represents 1,350 of the Audit Commission\'s workers, described it as a "bolt from the blue".
Government sources say they were exasperated by the body on Wednesday when it refused to allow all of its expenses over £500 to be published as part of Pickles\'s transparency drive. They also referred to occasions when the commission was contacted before the end of the working day and no one appeared to be in the office. The government thinks closing some of its functions down will save the taxpayer £50m.
It was thought most of the staff would lose their jobs but an aide to Pickles said staff would be encouraged to set up a company themselves in the mould of the John Lewis Partnership – in which employees own a share of the firm – to bid for some of the commission\'s contracts.
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 the creature of the Whitehall state. We need to redress this balance."
Pickles said the commission\'s responsibilities for inspecting local government would pass to the National Audit Office but private companies would now be invited to bid to carry out audits in order to drive down costs.
John Denham, shadow local government secretary, admitted he had been trying to reform the quango but that it shouldn\'t be abolished. Instead he described the move as "a determined attempt to ensure that taxpayers have no coherent information about the value for money of local services".
He said: "The Audit Commission doesn\'t just look at the cost but at the quality. Without the function of the Audit Commission there will be no one to step in when a council is failing, as Doncaster was recently. This move by the government shows they are only interested in the cost of everything and the value of nothing."
Pickles has been energetic in cutting the costs of his department this week. On Thursday he opted to publish the spending of civil servants at the communities and local government department over £500 rather than the £25,000 he had been asked to disclose. Last night he moved with similar alacrity to close down a body with which he has never enjoyed a good relationship.
The Audit Commission has been accused of sending overbearing diktats to local government – inimical to the coalition\'s dislike of regulation – such as telling councils to carry out fortnightly rather than weekly bin collections. Vince Cable once described the process it could make organisations go through in its audits as "disrespectful and utterly perverse".
The commission was also criticised for sending staff on lavish awaydays and offering them life coaching. It collided head-on with the communities secretary when he was Tory party chairman and it emerged that the commission had paid nearly £60,000 for advice on how to "combat the activities of Eric Pickles" although it was supposed to be politically neutral. Only a few weeks after taking office, Pickles vetoed the £240,000 pay package for its new head.
Pickles told the Daily Telegraph: "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. These proposed changes go hand in hand with plans to create an army of armchair auditors – local people able to hold local bodies to account for the way their tax pounds are spent and what that money is delivering."
In a statement tonight, the commission chairman Michael O\'Higgins expressed "regret" at Pickles\' decision but sought to get on the record it had been moving towards the kinds of reforms Pickles has now expedited.
O\'Higgins listed the commission\'s "significant successes".
These included the investigation of the 1980s rate-capping rebellion in Lambeth and Liverpool, which led to 79 councillors being surcharged and banned from office, and exposing the "homes for votes" scandal at Westminster Council in which they sold off council houses in marginal wards to boost the Tory vote.
"The Audit Commission was set up by a Conservative secretary of state in 1983, and I believe we have more than fulfilled Michael Heseltine\'s ambitions when he set it up", O\'Higgins said.
For more information, please visit
http://www.guardian.co.uk/politics/2010/[...]udit-commission-to-be-scrapped
