Today's announcement on private sector contracts for Audit Commission work confirms that the 'mutual option' was always a non-starter for public audit - and for the wider public sector too
By coincidence, the Audit Commission’s abandonment of the ‘mutual option’ for audit follows the weekend disclosure that police forces are being pressured by the Home Office to outsource great swathes of front as well as back-office work.
No mention by the chief constables of any ‘mutualism’ or ‘John Lewis’ model. Now, with the Audit Commission announcement, we can see the vaunted mutual or staff buyout for local audit was never anything more than a public relations ploy by Eric Pickles and a line in a press release for his hapless sidekick Bob Neill.
As for the prophet of non-profit, Professor Julian Le Grand of the LSE, he might as well pack up. Appointed by the Cameron government to head a task force on mutuals, he appears to have had no effect whatsoever. Ministers have no intention of creating space for employees to organise themselves as an alternative to profit making suppliers or the public sector.
Just as the contract the Surrey nurses’ cooperative was supposed to get went to Virgin, so audit is passing foursquare to private, profit making firms. And that includes the vestige of mutualism that DA Partnership represented – it gets a tiny share of the business, and is ‘owned’ by Mazars anyway.
Why register surprise? Intellectually Tory ministers remain Thatcherite, in the sense that they combine a conviction that private is more cost effective and a general wish to expand the arena of profit and private gain. What we will now see in audit is the working out of those beliefs, and their compatibility. ‘Cost effective’ audit probably means audit that’s less attentive to the needs and nuances of individual local authorities.
If the unit cost of audit is to fall dramatically, as the Audit Commission predicts, that cannot be accounted for by removing the allegedly bloated overhead of the Commission itself (which is set to continue in shrunken form for the duration of these contracts). So ‘quality’ will have to take the hit, including – as widely predicted – the de facto abandonment of the wider concern district audit has had with the public interest, whistleblowing and backstopping. In other words, with privatisation comes a change (we await evidence on whether it is a deterioration) in the service being provided.
Luckily, we may get that evidence. The Cabinet Office, formerly the cheer leader for mutuals and buy outs, is joining the Treasury, Committee of Public Accounts and National Audit Office in getting worried about the fragmentation of audit and value for money and may be about to set up an inquiry, which surely will have to look at how Ernst & Young, KPMG, Grant Thornton and the other winners from audit privatisation are actually going to squeeze profit out of a low margin business.
The Audit Commission itself is saying it is ‘safeguarding the extensive public sector experience of over 700 auditors who will transfer to the private sector’. Quite how that works it doesn’t say. Are they going to be professional whistle-blowers, disrupting partners’ meetings with tales of potentially costly local action? Doesn’t sound likely. There’s no automatic ‘ethics transfer’ and already the competition for available jobs (by definition the number of posts is shrinking) awards a premium to those who toe the corporate line.
