Scots public service reforms ‘require bigger audit role’

29 Jun 12
Public service reforms will make ­governance issues a priority in audit and inspection, Accounts Commission chair John Baillie has told Public Finance.
By Keith Aitken in Edinburgh | 2 July 2012

Public service reforms will make ­governance issues a priority in audit and inspection, Accounts Commission chair John Baillie has told Public Finance.

John Baillie

The prediction from Baillie, whose commission monitors local government in Scotland, came as outgoing auditor general Bob Black warned that recent quango mergers had lacked strong leadership and vision, and cost significantly more than anticipated.

Baillie said pressure from the Scottish Government for public sector reforms required a markedly different approach from agencies charged with ensuring value for the public’s money. He cited changes such as shared services, health and social care mergers, third-sector and arm’s-length provision, institutional restructuring and the creation of single bodies for the uniformed services.

He said shared services were worth considering but added they were not a panacea and would require a greater emphasis on governance in the audit process. ‘Who is doing what, how do we recognise and measure success, and how do we ­maintain it? The particularly difficult aspect to measure is whether things are any better, whether it was worth it.’

Baillie added that the need to develop new diagnostic techniques was increased by the shift to outcomes-based performance measures, which were often not ­measurable in financial terms.

Further uncertainty came from the UK coalition’s welfare reforms. Most benefits are to be replaced by the single Universal Credit, but responsibility for Council Tax Benefit will be passed to local authorities, along with a 10% cut in funds. The Scottish Government has said it will make up the cut, but Baillie said the detail of how the system would work remained unclear.

He told PF: ‘I would accept that the role we have to play is expanded by the reform and partnership agendas. I wouldn’t want to claim that it’s more important – I think that would be tactically and strategically wrong to say – but I do think it has expanded. And there is a genuinely positive attitude in the commission to take these things on and crack them.’

The replacement of regional police and fire & rescue boards with national agencies shifts them from the ­commission’s purview to that of the auditor general.

But local accountability for the ­uniformed services will be preserved through ­Community Planning Partnerships, the local alliances set up to better integrate service provision. Ministers have asked the commission to develop audit procedures focused on the partnerships rather than on the councils in whose areas they operate. The first three pilot audits are expected in the autumn.

The early development of the CPPs had been patchy, Baillie acknowledged, and the audits will initially draw largely on existing information for the partner bodies, but with governance again ‘the big question’.

Governance also emerges as a central issue in Black’s critique of the Scottish Government’s ‘bonfire of the quangos’, which aimed to cut the number of public sector bodies by a quarter. The auditor general’s report looks at nine quango mergers between 2008 and 2011, and mounts a detailed examination of the four that created the Care Inspectorate, Creative Scotland, Marine Scotland and Skills Development Scotland.

Those have so far cost £42m, much more than the £30m forecast. Although staff numbers have been cut in the restructuring process, the report says it is too early yet to identify performance improvements.

‘The experience of recent mergers has shown that it is vital to have strong leadership in place as early as possible,’ Black commented.

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