27 June 2003
Would private auditors create an irreconcilable split between New Labour and the Audit Commission?
The honeymoon is long over. The stresses in the relationship between New Labour and the Audit Commission are showing. As the furniture is rearranged to bring a new feel to things, there are fears that if the commission continues to assert its independence, the government may never return to the marital bed.
Furniture change comes through the appointment of Steve Bundred – respected former chief executive of the London Borough of Camden and head of the Improvement and Development Agency for a mere six months – as chief executive of the commission from September.
This follows the appointment in November of James Strachan as chair – almost a year after previous incumbent Dame Helena Shovelton left. The Conservatives accused ministers of forcing Shovelton out for signing off critical reports.
If there was a sense of drift while the post was vacant, things are different now. In both public and private, Strachan is making his mark. Perhaps to stress that he is not a New Labour patsy – as the media suggested in reference to his relationship with former arts minister Tessa Blackstone – Strachan has been strident in his criticisms of government policy, especially regarding arrangements for foundation hospitals.
A commission insider adds that Strachan is just as assertive within Vincent Square. Sir Andrew Foster has been sidelined. Strachan is the decision-maker with a robust approach to staff relations. Bundred may find he cannot walk in the door and set the organisation's course.
Meanwhile, the role of the commission is undergoing its own major change. While it has moved to a more holistic approach to local government through Comprehensive Performance Assessments, the commission is almost irrelevant in terms of future health provision.
Its value-for-money and inspection work will be taken on by the Commission for Healthcare Audit and Inspection next year. And, perhaps most significantly, foundation hospitals will be able to choose their own auditor, striking out the commission's role in choosing them for trusts.
Tony Travers, former audit commissioner and director of the Greater London Group at the London School of Economics, believes the tension between the government and the commission is more perceived than real, but recognises there are serious difficulties.
'Clearly, over a year or two, things have gone to the dogs somewhat,' he says. 'Partly over the problem of the government becoming more aggressive in its use of regulators and stripping away part of the Audit Commission empire, particularly in health and social services. More recently, individual reports have been published where the commission has pursued a line which will not have gone down well in government.'
A commission insider confirmed this view: 'The Audit Commission is at the end of its tether in the health sector. The government doesn't want it to have any role in health any more and so [the commission] is not prepared to pull its punches.'
There is a sense of astonishment at the commission that this could lead to it being stripped of its auditor appointment role for foundation hospitals.
Yet a spokeswoman for the Department of Health is adamant that foundation hospitals will be free to choose an auditor. The commission's hope, in private, is that the Treasury will now wake up to the implications and intervene.
Audit commissioner Professor Sue Richards of Birmingham University is confident the proposals will be changed as the Bill goes through Parliament. 'It's a great strength of audit in the public sector that audited bodies don't choose their own auditor, but it is chosen for them,' she says. 'Looking at Enron etc, audit in the public sector is rather better. Moving to private sector audit seems entirely daft.'
Richards adds that if the government remains committed to the use of private auditors in foundation hospitals, this would undermine ministerial assurances that the move is not privatisation.
And the commission is supported by many Labour backbenchers, including the influential chair of the Commons' health select committee, David Hinchcliffe, who says removing the commission's audit role 'would not be a helpful course of action'.
The government may find that listening more to its irritating partner might spare it more severe difficulties in the longer term.
PFjun2003
