By Vivienne Russell | 4 November 2013
The National Audit Office should be empowered to audit contracts government bodies enter into with private firms, the chair of the Public Accounts Committee has said.
In a wide-ranging speech to the CIPFA Better Governance Forum, Margaret Hodge said the massive expansion of outsourcing across the public sector, and the growth in free schools and academies, was fragmenting traditional accountability structures.
She said this lack of clear accountability had made the PAC very dependent on whistleblowers to expose the abuse of public money.
Hodge suggested three ways in which scrutiny of public service contracts could be boosted. The first and simplest was giving the NAO the right to ‘follow the public pound in that contract and audit it’ she said.
The other two were requiring private firms to make their contracts ‘very open’ and extending Freedom of Information provisions to public service contracts.
‘If this is the way our taxpayers’ money is going to be used, we have to establish better structures of accountability,’ said Hodge.
She went on to reflect on the legacy of the abolition of the Audit Commission, which left
the NAO as ‘the only show in town’ in terms of formal checks on government spending.
‘I feel nervous and uncomfortable about that,’ Hodge said. ‘The task is just ginormous. We are in danger of not doing the job that taxpayers expect us to do.’
Criticism was also reserved for the civil service, particularly its shortage of commercial skills, the high turnover of personnel managing major projects and an often short-term outlook.
Hodge was scathing of some senior civil servants’ refusal to co-operate with PAC inquiries, and said the committee was beginning to assert its powers of summons and use its ability to put witnesses on oath.
Reflecting on her remarks on the PF Blog, CIPFA chief Rob Whiteman said when civil servants failed to speak out, it was often not through fear.
‘More often, it is the result of a collective bias to optimism in organisations, whereby a given outcome is so desired by those involved that everyone invests in the belief that it will happen.
‘This perhaps well-meaning weakness is perilous when billions of pounds of public money is at stake,’ he said.