Audit Commission staff back employee-owned mutual after abolition

22 Mar 11
Audit Commission staff are in favour of establishing an employee-owned mutual, but slow and unclear movement by the government risks derailing the plans, MPs were told last night.

By Lucy Phillips

22 March 2011

Audit Commission staff are in favour of establishing an employee-owned mutual, but slow and unclear movement by the government risks derailing the plans, MPs were told last night.

Representatives from the Prospect union told the Commons inquiry into the audit and inspection of local authorities that 83% of its members at the Audit Commission supported proposals to become a mutual when the quango is abolished.

But Chris Round, Audit Commission branch chair, warned: ‘We can be very supportive of a mutual but we don’t know what the audit regime is going to be. The biggest problem is uncertainty. If it’s going to happen, some decision needs to be made urgently. At the moment staff are in limbo.’

He said the majority of the 900 audit practice employees remained with the watchdog but if the government continued to dither ‘we could lose staff’.

Round added that staff were only in favour of the mutual on condition that ‘there would be some safeguard to ensure it would not be sold off to another private sector firm [in future years].’

Dai Hudd, deputy general secretary for Prospect, told the communities and local government select committee that there were ‘powerful arguments’ for reform of the Audit Commission and the union would ‘not argue for it in its current form’.

He denied accusations from the committee that he was just trying to protect members’ jobs. Hudd said Prospect supported a mutual model for the audit practice, which would ‘respond to a lot of the criticisms’ levied against the watchdog currently.

But he said there had been no clear guidance from government on what form the mutual might take and if pensions and future legal liabilities would be underwritten.

Hudd said Cabinet Office minister Francis Maude had not put ‘any flesh on the bones’ of his proposals for widespread mutualisation in the public sector and the union was trying to ‘tease out’ further information before it could put forward a model to members.

Hudd also told the committee that it would take time to make any Audit Commission spin-off ‘fit’ to compete openly in the market against the Big Four private sector audit firms. ‘The idea of putting an organisation into that competitive world within the lifetime of this Parliament is fanciful... Bigger players will be able to underpin costs in the way the Audit Commission can’t,’ he said.

He added that in order to be more aggressive in competing for commercial contracts the watchdog would need a ‘management regime differently configured to the one it currently has’.

John Seddon, managing director of Vanguard Consulting, also gave evidence to the committee last night. He launched a scathing attack on the Audit Commission, wholly welcoming its abolition.

Seddon said: ‘The Audit Commission has been an instrument of Whitehall, coercing local authorities to comply with ideology and ideas from the centre, both in a macro-sense and micro-sense.’

He added that the regime had resulted in ‘star junkies’, local authority chief executives who would do anything to improve their ratings from the watchdog.

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