Knotty problems for Eric Pickles, by Jim Brooks

16 Aug 10
There's no doubt the Audit Commission made a big mistake by employing a lobbying firm. But the subsequent decision by communities secretary Eric Pickles to abolish the watchdog seems both excessive and unreasonable

There’s no doubt the Audit Commission made a big mistake in commissioning a public affairs company to help improve relations with the coalition’s ministerial team and, specifically, communities secretary Eric Pickles. But the punishment inflicted by Pickles, abolition of the watchdog by 2012, seems excessive and unreasonable.

While I can’t condone the commission’s actions, I’m not sure that structural reform should be the first reaction. The activity did not undermine the constitutional role of the organisation. It called into question the decisions of people within the commission. Surely, internal reform and some change in personnel would have been more appropriate.

The early reports on abolition appear to highlight 'extravagance' and 'lack of focus'. Again, this feels like a case for change of approach and, perhaps, management rather than organisational mayhem.

Constitutionally, the Audit Commission will need to be reinvented in some similar guise, even if it were to be externalised. Audit is something you might externalise as a first step, but, as shared services and externalisation progress, you would want to bring audit back inside as part of overall risk management and good practice.

Abolition leaves a gap that breaches the implicit relationship between central government, local government and the citizen or elector. It’s like a Borromean knot – three interlinked circles that provide strength and unity. However, if one of the circles is removed the whole structure falls apart.

The commission became part of this knot, linking the citizen with central and local government, both as the historic external auditor and, latterly as the driver for Comprehensive Area Assessments (CAA) and as the lead inspector in the inspection regime.

In a rational world, the partnership between central and local government would be underpinned by an appropriate tax base. As both central and local government are directly elected, there should be no issue about legitimacy. Some services are delivered by Whitehall and some by town halls, and there are choices about how this is done. The citizen would receive services and would pay for them through a mixture of direct charges, local property taxes and central taxation. He or she then expresses satisfaction or otherwise through the ballot box at both national and local level.

But the rationale changed under New Labour. Central government saw itself as responsible for all public services, choosing to deliver some directly, some through agencies and some through local government. This was a big extension of the concept of positive government.

The introduction and proliferation of the inspection regime was one indication of this. Through this mechanism, the government imposed quality control and performance measurement on local government, clearly seeing itself as the piper calling the tune. We have become used to hearing ministers saying that they will not hesitate to step in at local level to ensure that standards are maintained. We now have league tables showing the ‘best’ and the ‘worst’ authorities according to the current criteria.

In one newly-created unitary authority I worked in, we set up a secondary emergency control room complete with all the strategic documentation, maps, ITC links and coffee machine. So many inspectors arrived unannounced and unexpected that we formulated a rule that whichever inspector arrived first on Monday morning got the room for the week.

I became a firm advocate that the Audit Commission should co-ordinate the inspection regime. They understand local government and have professional relationships with client authorities. They are truly independent and can see the whole picture of the challenges facing local authorities. Hitherto, they have provided the overall support and challenge through the annual external audit process, including the management letter.

But with the abolition of CAA and, now, the commission, this will not be possible. The net result of all of this is to create a break in the continuum of the relationships in our Borromean Knot. Without the Audit Commission between government and local government, the relationship with the citizen needs reassessing. The knot is broken and will need to be remade.

A strong and independent Audit Commission is essential to the stewardship and probity of local government. Its record speaks for itself. We need to get past this and get on with the next stage of improving public services in a time of declining resources. This is a knotty enough problem as it is, without these political complications.

We must remake the relationship based on an equal partnership of central and local government, with the Audit Commission as referee. And in that analysis, we must include the citizen: the elector, who seems to have got lost in all these claims about who represents whom.

Jim Brooks is an independent consultant ([email protected])

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