Goodbye to all that, by Malcolm Prowle

16 Aug 10
So, the Audit Commission is to be abolished. The government had promised a bonfire of the quangos, but few thought the commission would be on the list. Perhaps we should now take more seriously ministers' declared aim of freeing local government from central control

So the Audit Commission is to be abolished. Prior to the election, many of us talked about the abolition of quangos as a cost reduction exercise but we didn’t really think the Audit Commission would be on the hit list – it seemed too important an instrument of central government control.

Perhaps we should now take more seriously the government’s declared aims of freeing-up local government from central control and giving it greater responsibility.

In future, local authorities will be able to appoint their own external auditors,which puts them in the same position as private companies, universities and colleges. This should be a good thing in that it allows authorities to be treated as grown ups rather than children.

However, if councils have to make a choice of auditor from the four remaining big accountancy firms then this is a very restrictive choice and one that could encourage uncompetitive behaviour by those firms. Hence a key part of the government’s proposals is to bring more competition into the audit market by involving other large to medium-sized firms.

The problem is that many of us are unclear whether the Conservative party stands for competition and free markets or the protection of existing businesses.

The government also talks about finding ways of transferring the Audit Commission’s in-house audit service into the private sector, but I would be sceptical about that actually happening.

So, in future, local authorities won’t need to worry about CAA, CPA, ALE or VFM scores. No doubt they will be relieved to be free of the bureaucracy associated with the work of the Audit Commission.

But in the absence of ongoing pressure from the commission to improve services, councils will have to take responsibility for improving their own performance and making it clear to residents how those improvements have been achieved in a time of financial austerity. The difference is that they will now have greater autonomy in how they do this.

So is the abolition of the Audit Commission a time for regret or celebration? No doubt people will be deeply divided about this. At least we will see an end to some of the headline-grabbing activities of the commission in the media, along the lines of how local authorities could save endless millions of pounds merely by implementing some Audit Commission recommendations.

If only it were that easy to do. I am not sure those commission activities gave good VFM.

Malcolm Prowle is Professor of Business Performance at Nottingham Business School and a visiting professor at the Open University Business. He can be contacted via his web page

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