The National Audit Office needs a new strategy to cope with austerity and the new devolution and localism settlements. It will be an early challenge for its new chair
The first thing Lord Michael Bichard will do when he takes over in January as chair of the National Audit Office board is ask for a rewrite of its strategy for the tumultuous years ahead.
Yes, the latest strategy is just out. But that was before George Osborne sealed the fate of the public services in his austerity statement, making it even more vital to distinguish cuts from efficiency savings.
The NAO document also has a provisional feel because it’s the last word from Sir Andrew Likierman, who is standing down as the first chair of the NAO’s board.
Bichard, being a peer, is likely to have a much more energetic and engaged relationship with parliament; he will oversee the transition in May to a new chair of the Commons Public Accounts Committee, though amid the multiple possible political and electoral scenarios Margaret Hodge might stay on.
Where Bichard will want more focus is, first, the centre. Pushed by Hodge – who isn’t given the credit she deserves in the NAO paper – the watchdog has become one of the most potent critics of the capacity of the Whitehall civil service. But it has not yet been able to translate its findings – on procurement, project management, silo working – into a programme for reform.
What would an ideal structure look like, to cope with austerity, the new devolution and localism settlements and parliamentary instability? Until now, no one would have thought it appropriate to ask the NAO but over the next few years it will have to come up with some sort of answer.
It’s a parallel question to the one about ‘transformation’. The NAO use that grand and empty word a lot. It will need to get rigorous. What does it mean, for example, in defence? There, the carriers and Trident renewal bring huge sunk costs, blocking change in the composition and deployment of the forces.
What the NAO strategy underplays is tax, and that’s puzzling. One of the great achievements of the reign of Amyas Morse as comptroller, along with Hodge, has been to push and chivvy HM Revenue & Customs and that agency now feels like a fitter and more effective means of securing the nation’s tax receipts.
There’s a long distance yet to go. This week the Public Accounts Committee questions PricewaterhouseCoopers about its involvement in Luxembourg, and the assistance it has given umpteen ostensibly United Kingdom companies with their tax affairs in order to minimise their payments here. But the NAO itself is still under-equipped with experts and investigators. If the ‘Google tax’ announced by Osborne is to secure even a fraction of the promised return, HMRC and the NAO will need to be ultra smart.
Disappointingly, the NAO paper spouts the usual stuff about bringing in private providers to reduce the cost base for public services. Disappointing because in recent years Hodge and Morse have done excellent work in examining the efficiency and reliability of the likes of Serco, Capita and G4S and, more than once, found them wanting. It is simply not demonstrable that private provision will automatically cut costs; it may jeopardise accountability and longer run sustainability.
The NAO has used its resources well and deserves the tiny increment asked for in its strategy to 2018. In the storms ahead we need its critical faculties to be sharper than ever, but – new territory – we also need an NAO that goes beyond value for money and audit essentials into how to reshape entire functions and services areas and – Bichard’s specialty – how to refashion Whitehall.
