Audit Commission accused of wasting money on head-hunters

27 Apr 11
The Audit Commission has been lambasted for wasting tens of thousands of pounds of public money on head-hunters amid fresh allegations of profligacy
By Lucy Phillips

27 April 2011

The Audit Commission has been lambasted for wasting tens of thousands of pounds of public money on head-hunters amid fresh allegations of profligacy.

Figures revealed to Parliament show £128,200 was spent on fees to executive recruitment consultants between 2008 and 2010.

This included £22,000 in April 2010 to recruit a new chief executive following the departure of Steve Bundred.  The recruitment process had to be halted when the government announced the abolition of the commission last August and Eugene Sullivan, the acting chief executive, continued in the role.

Some £30,000 was also spent recruiting a managing director of communications in June 2008. The post was filled by David Walker, who left after two years.

The remaining sums were spent hiring directors of corporate services (£14,200 and £12,000), heads of policy and assessment (£16,000 and £20,000) and a local government finance policy adviser (£14,000).

Eric Ollerenshaw, the Tory backbencher who uncovered the spending through a parliamentary question, told Public Finance that the money spent on recruitment consultants was ‘incredible’ because ‘it was quite an obvious pool of people’ that would be suitable for such roles.  

Condemning the practice across local government, as well as at the Audit Commission, he added: ‘Why were they always hiring head-hunters when you would have thought the top salaries would attract people anyway?

‘What seems to have happened under the previous government was a kind of gamesmanship using consultants and head-hunters with little understanding that the money was public money.’

The Conservative MP for Lancaster and Fleetwood said the £22,000 spent in the futile attempt to recruit a new Audit Commission chief executive was the equivalent of another public sector frontline job.

The Audit Commission defended the expenditure. A spokesman said: ‘Recruitment agencies are typically used across the public and private sector in the search for the right people to fill senior management posts. The amounts given here are not unusual for these services, which include head-hunting across relevant markets, and recruitment advertising in trade and national publications.

‘With regards to the commission seeking to replace Steve Bundred as chief executive in 2010, events overtook that project when the secretary of state announced our abolition.’ 

Meanwhile, new accusations of lavish spending by executives at the commission have emerged.

After another parliamentary question from Ollerenshaw, the watchdog has published all its government credit card spending from April 2008 to March 2010. Items include bills from top London restaurants, music retailer HMV and cinema tickets. More than £20,000 was spent by senior managers who had access to the cards over the two year period.

Ollerenshaw, who was previously a local councillor, said: ‘You regarded the Audit Commission as the ultimate judge of value for money in terms of what we were doing as councillors and local authorities. To find out they could not apply the same rules to themselves is quite astonishing. There seemed to be a dual standard operating.’

He said he was concerned that similar instances had happened across other government agencies under the previous government. It was not just an issue for the Department for Communities and Local Government, he added.

The expenditure was also condemned by local government minister Grant Shapps. He said: ‘These revelations show a deep-rooted culture of waste in the Audit Commission. The body was treating the government procurement card as its flexible friend, spending taxpayers’ cash as if it had just won the lottery.’

The commission again defended itself. A spokesman said: 'In common with many public bodies, the Audit Commission uses Government Procurement Cards for low-value transactions or where a purchase order is impractical. Procurement cards are recognised as the most cost-effective way of dealing with such transactions and often result in lower prices.

‘Between April 2008 and March 2010 we processed 8,818 transactions at an average cost of £125. All purchases were for legitimate business purposes. Payments made by these procurement cards are routinely checked to ensure the cards are being used correctly.'

Ministers are now preparing to launch an inquiry into spending on government procurement cards across public sector bodies.

A spokesman from the DCLG said ministers were ‘looking at what the justification and business case would be for expenditure like this’.

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