By Richard Johnstone | 31 May 2012
Ministers have been urged to rule out greater Whitehall monitoring of local government after fresh concerns were raised that the abolition of the Audit Commission could lead to increased central oversight.
The government confirmed its plans to scrap the watchdog in the Queen’s Speech on May 9. A draft Bill to wind it up and usher in the new audit regime for England is expected to be published in the summer. This will allow councils to appoint their own auditors and, in the interim, agreements have been reached to outsource the commission’s audit work to private firms.
But both the Local Government Association and audit experts have highlighted dangers with the changes, warning that Whitehall departments are starting to take on some regulatory functions.
LGA chief executive Carolyn Downs has said that she is ‘quite worried about the future’ following the reforms.
Speaking at the launch of the Society of Local Authority Chief Executives’ Future of public audit pamphlet, Downs said that she was concerned that ‘Whitehall departments are setting themselves up as regulators’.
She singled out the Department for Education, saying it was introducing performance measures, such as adoption scorecards, that councils have to comply with. Coupled with the existing regulators, such as Ofsted and the Care Quality Commission, ‘some departments are working in that space of regulators’, she said. ‘I’m not sure they have either the capacity or the understanding to undertake the role in the way that the Audit Commission did.’
George Jones, emeritus professor of government at the London School of Economics, told Public Finance that he shares this fear of greater Westminster scrutiny. Jones, who also contributed to the pamphlet, said government should ensure that the legislation reinforces the independence of local audit and accountability to remove the ‘danger’ of more central examination.
He said that he favours local authorities appointing their own auditors, and added: ‘What we don’t want is local authorities to be in any way accountable to the Public Accounts Committee [when the Audit Commission is abolished].
‘Parliament has set up local authorities with their own accountability with their local voters and we don’t need the PAC or National Audit Office messing around trying to audit local authorities.’
PF understands that the PAC is set to examine the draft Bill to abolish the commission to assess its impact on local NHS and police bodies, which the commission currently oversees. Jones added: ‘I’m sure that the centralisers will say why can’t local authorities be accountable to central government.’
He called on the government to confirm central oversight would not grow. ‘I would like there to be a statement from ministers somewhere that they don’t want that, and that they will respect the accountability of local authorities to their own voters.’
Communities Secretary Eric Pickles announced in August 2010 that the watchdog would be scrapped. Following the Queen’s Speech, local government minister Grant Shapps said that ‘a more streamlined and competitive local system’ would ‘bring about the new arrangements that increase [councils’] public accountability’.
But Bob Black, outgoing auditor general for Scotland, has also raised concerns about the plans. He said that his view on the debate in England was similar to that on genetically modified crops: ‘It is probably perfectly safe, but all things being equal I would rather not have them in the field.’
Black queried whether the new system would be better than what preceded it. He also questioned what the ‘authorising environment’ for local audit will be – who is ultimately responsible for holding authorities to account. ‘Where is civil society going to get information which is truly objective and validated about the performance of public bodies in England?’
The local government and communities select committee is to examine the Audit Bill in draft form. Chair Clive Betts told PF that arrangements for the scrutiny of the legislation were currently being decided.
In a report published last July, the committee raised concerns about the impact the abolition of the Audit Commission would have on ‘the vital principle of auditor independence’.
Betts said that his committee will closely examine the proposals to see if this has been addressed. ‘One of our main concerns is that councils will be appointing their own auditors and we will look for some degree of guidance on that.’
He added that examination of the Bill could begin with a call for evidence before Parliament’s summer recess begins on July 17.
Ministers have been urged to rule out greater Whitehall monitoring of local government after fresh concerns were raised that the abolition of the Audit Commission could lead to increased central oversight.
The government confirmed its plans to scrap the watchdog in the Queen’s Speech on May 9. A draft Bill to wind it up and usher in the new audit regime for England is expected to be published in the summer. This will allow councils to appoint their own auditors and, in the interim, agreements have been reached to outsource the commission’s audit work to private firms. But both the Local Government Association and audit experts have highlighted dangers with the changes, warning that Whitehall departments are starting to take on some regulatory functions.
LGA chief executive Carolyn Downs has said that she is ‘quite worried about the future’ following the reforms.
Speaking at the launch of the Society of Local Authority Chief Executives’ Future of public audit pamphlet, Downs said that she was concerned that ‘Whitehall departments are setting themselves up as regulators’.
She singled out the Department for Education, saying it was introducing performance measures, such as adoption scorecards, that councils have to comply with. Coupled with the existing regulators, such as Ofsted and the Care Quality Commission, ‘some departments are working in that space of regulators’, she said. ‘I’m not sure they have either the capacity or the understanding to undertake the role in the way that the Audit Commission did.’
George Jones, emeritus professor of government at the London School of Economics, told Public Finance that he shares this fear of greater Westminster scrutiny. Jones, who also contributed to the pamphlet, said government should ensure that the legislation reinforces the independence of local audit and accountability to remove the ‘danger’ of more central examination.
He said that he favours local authorities appointing their own auditors, and added: ‘What we don’t want is local authorities to be in any way accountable to the Public Accounts Committee [when the Audit Commission is abolished].
‘Parliament has set up local authorities with their own accountability with their local voters and we don’t need the PAC or National Audit Office messing around trying to audit local authorities.’
PF understands that the PAC is set to examine the draft Bill to abolish the commission to assess its impact on local NHS and police bodies, which the commission currently oversees. Jones added: ‘I’m sure that the centralisers will say why can’t local authorities be accountable to central government.’
He called on the government to confirm central oversight would not grow. ‘I would like there to be a statement from ministers somewhere that they don’t want that, and that they will respect the accountability of local authorities to their own voters.’
Communities Secretary Eric Pickles announced in August 2010 that the watchdog would be scrapped. Following the Queen’s Speech, local government minister Grant Shapps said that ‘a more streamlined and competitive local system’ would ‘bring about the new arrangements that increase [councils’] public accountability’.
But Bob Black, outgoing auditor general for Scotland, has also raised concerns about the plans. He said that his view on the debate in England was similar to that on genetically modified crops: ‘It is probably perfectly safe, but all things being equal I would rather not have them in the field.’
Black queried whether the new system would be better than what preceded it. He also questioned what the ‘authorising environment’ for local audit will be – who is ultimately responsible for holding authorities to account. ‘Where is civil society going to get information which is truly objective and validated about the performance of public bodies in England?’
The local government and communities select committee is to examine the Audit Bill in draft form. Chair Clive Betts told PF that arrangements for the scrutiny of the legislation were currently being decided.
In a report published last July, the committee raised concerns about the impact the abolition of the Audit Commission would have on ‘the vital principle of auditor independence’.
Betts said that his committee will closely examine the proposals to see if this has been addressed. ‘One of our main concerns is that councils will be appointing their own auditors and we will look for some degree of guidance on that.’
He added that examination of the Bill could begin with a call for evidence before Parliament’s summer recess begins on July 17.
