11 January 2008
Local authorities have attacked the Audit Commission's 'unacceptable' plan to hike its audit fees by up to a third by 2011 and are fighting a last-ditch battle to kill off the proposals.
The public spending watchdog's plans to implement above-inflation increases over the next three financial years have outraged councils.
They argue that the body charged with ensuring value for money should not be increasing its bureaucratic costs at a time when town hall budgets are under severe strain.
The commission, whose consultation on the plan was due to close on January 11, wants to increase its fees for 'use of resources' assessments by varying amounts for different groups of authorities.
Districts will be worst hit: the commission is proposing a 14% increase in 2008/09, followed by 8% rises in 2009/10 and 2010/11. Fees for unitaries will be upped by 9% in each of the first two years, then 7%, while metropolitan authorities face increases of 7%, 9% and 7%.
The Local Government Association says the hikes will force councils to spend £250m on inspections between 2008 and 2011 – the equivalent of 1% on council tax.
An LGA spokesman told Public Finance: 'It is staggering that, despite the pledge by ministers to keep assessment costs down and despite the remit of the Audit Commission being to make sure public money is being spent wisely by councils, they have ratcheted up fees.'
He added: 'The commission should ensure that changes to the proposed 'use of resources' assessment lead to reduced fees. With councils facing the worst financial settlement in a decade, cutting the assessment burden is crucial to release money for frontline services or cut council tax.'
Robert Gordon, the leader of Hertfordshire County Council, condemned the commission's plans as 'outrageous'.
'Inspections determine whether local authorities are delivering value for money. They should practise what they preach and ask themselves whether these increases represent value for money for their services,' Gordon added.
'The commission is widening its remit and planning to shift the burden of cost for this extra work on to councils, which is unacceptable.'
But the commission claims its fee increases are unavoidable. In a statement to PF it cited the expense of hiring experts in audit and the costs of the move to International Financial Reporting Standards.
It also says the fee increases will be offset by the overall reduction in inspection costs when Comprehensive Area Assessments are introduced next year.
The statement added: 'The changes, currently out for consultation, are a response to the very clear expectation from central government that the [use of resources] assessment should be expanded significantly in scope to include commissioning, asset management and sustainability.'