Abolition angst, by David Walker

16 Feb 11
The Audit Commission cheats death! It's now a fair bet - you could try laying odds at Paddy Power - that Eric Pickles' bete noire will outlast his tenure as Communities Secretary

The Audit Commission cheats death! It’s now a fair bet – you could try laying odds at Paddy Power – that Eric Pickles’ bete noire will outlast his tenure as Communities Secretary.

It now looks like the commission will stagger on until 2014, by when the feisty secretary of state will have either moved on or been fired. And remember, Pickles promised the commission would be gone in time for the financial year 2012/13.

The saga of the commission’s abolition is proving interminable. Next month (possibly) the Department for Communities and Local Government will publish a consultation document, to be followed in September/October by a draft bill. Pickles has promised six months of pre-legislative scrutiny and the earliest an actual bill would be laid before parliament is June/July 2012.

Even if parliamentary debate were truncated, the bill would not be enacted till late in the year or even 2013. By that point, audit for 2013/14 would already have had to be organised. No new audit regime could kick off till April 2014, at the earliest.

Delay is down to the DCLG. It is losing 40% of its civil service numbers. Top management is in the throes of reorganisation. New permanent secretary Sir Bob Kerslake is taking his time to get a grip.

But the basic problem is competence. The DCLG has never thought much, or indeed cared about audit. In Whitehall terms, audit has been the province of the Treasury and, in terms of accountancy regulation, trade and industry, now the Department of Business, Innovation and Skills. DCLG officials have struggled to cope with Pickles’ wilful decision to abolish without prior consultation and review.

But with typical Whitehall hauteur, they have not been able to admit their deficiencies of knowledge and policy. They have tried to do things on the QT, through private meetings with the Institute of Chartered Accountants in England and Wales, CIPFA and the Financial Reporting Council.

Paradoxically, for want of anyone else, the DCLG is having to rely on the Audit Commission itself to say what it can and can’t do. Ironically, local government – which was supposed to benefit the most from abolition – has even now not been consulted about the shape of things to come.

Blame lies with Pickles himself. Putting out press releases and slagging off quangos in television interviews is easy. Devising an audit regime isn’t – at least a regime that is going to assure the public, placate Tory councillors (who thought they have been promised a cut in fees and onerous inspection), satisfy Tory party donors in the Big Four and, somehow, embrace the state audit establishment, mainly in the shape of the National Audit Office.

The NAO’s refusal to engage with the future audit of local spending since Pickles made his announcement (he thought with the Comptroller and Auditor General’s approval) is quite extraordinary.

Somehow, over the next few weeks the DCLG has to put together a consultation document less flimsy than the evidence it proffered the Commons Communities Committee. It wants to keep value for money auditing, indeed most of what Audit Commission-appointed auditors now do. But that won’t save any money, and raises all manner of questions about whom auditors report to and how local VFM work relates to the wider efficiency and effectiveness agenda, in which the Treasury and Cabinet Office have an abiding interest.

Want a case study of policy failure? Ironically, the last Audit Commission annual lecture was given by Professor Anthony King about his forthcoming book on Whitehall policy errors. What is happening to local audit, that’s to say what is not happening, looks like giving him his last chapter.

David Walker is the former managing director for communications at the Audit Commission. His evidence to the Commons DCLG Committee inquiry on the future of audit is available here

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