By Lucy Phillips
6 September 2010
The Audit Commission has appointed its local government chief Gareth Davies to oversee a bid to transform the watchdog into an employee-owned co-operative or mutual.
Davies will begin his new post as managing director of audit straight away, the commission announced today. The appointment came after CommunitiesSecretary Eric Pickles said on August 13 that the £200m-a -year quango would beabolished in 2012/13. He urged the commission to establish its audit function as an independent body, ready to compete in a new open market.
Davies, a CIPFA member, will now develop a business case for an employee buy-out, to put before the Audit Commission board, which has also been approached by other interested parties. It will also be subject to government approval.
He told Public Finance he had received ‘an overwhelmingly positive response’ to the idea of an employee-owned business from the 900 staff employed in the audit function. This stemmed from ‘a very long and proud history’ in audit that they ‘are reluctant to see broken up and lost’. This would ‘stand up very well’ in a new open market, he said.
Davies added that the commission’s experience of bidding for foundation trust audits since 2005 showed it was ‘not just blind faith’. He said: ‘We have real confidence that people will choose to have us as their auditors when given the choice.’
It was too early to say how big any resulting organisation would be, Davies told PF. But he revealed that they wanted ‘to get as big a share of the market as we can and diversify into other parts of the market’, including housing associations, further education institutions and charities.
‘There’s a much wider not-for-profit sector that we think would find our kind of work very attractive,’ he said.
The commission currently conducts audits for local government and some aspects of health, housing, police and fire and rescue.
Davies, who is paid between £175,000 and £180,000 a year, said he had not received a pay increase to take on the new role. ‘This is not the time for salary rises... I’m on my existing terms and conditions,’ he said.
His first task will be to develop a ‘credible business plan’ that will look at the various different models of employee-owned enterprises. After that he would begin talks with ‘partners, possible funders and staff who we might be asking to invest in the business’.
See here for more on the abolition of the Audit Commission.
