‘Major shake-up of public audit needed’

13 Feb 19

A “radical overhaul” of public service audit is needed to give the public confidence over how its money is spent, according to recommendations from a think-tank.

Increasing financial pressures and people’s dissatisfaction with public services means now is the time for a shake-up of audit for central and local government, the authors of a report for the Smith Institute said.

Tax is likely to increase in the future as a result of demographic pressure on areas such as health and social care, and these can only be justified if the public is “confident” its money is being well spent, authors John Tizard and David Walker told the report launch yesterday.

“Fiscal pressure is likely to rise in the short run, depending on the nature of Brexit. It will certainly grow in the long run, as public spending accommodates demographic change: an older population will demand more health and social care and other services,” Spending fairly, spending well said.

It called for the creation of two new government bodies and more responsibilities given to the National Audit Office to improve public audit. 

The NAO would take over audit responsibilities for the NHS and local government, the report suggested. 

Authors audit commentator Tizard and David Walker, former head of communications at the Audit Commission, urged for the creation of a Public Interest Appraisal Unit, which would evaluate value for money before spending decisions are made. The NAO assesses government spending decisions after they have been made. 

They also said the government should set up an Office of the three Es – equity, efficiency and effectiveness. This body would be responsible for looking at which groups benefit and which groups lose out on certain spending decisions.

Efficiency would be measured by assessing what a service costs and what the output is and effectiveness should be tracked using data about who can use a service, how often and whether one section of the population can not or will not use it.

Chairing the event on Tuesday, Lord Kerslake, former permanent secretary at the Department for Communities and Local Government noted that audit would be under increased scrutiny in future because the UK is a “chronically unequal country”.

He said: “People will not back new spending unless they are confident it would be spent wisely.”

Kerslake gave the government’s contract with Seaborne Freight, to provide cross-channel services in a no-deal Brexit scenario, as an example of growing public dissatisfaction with how taxpayers’ money is spent.

Seaborne Freight was recently stripped of its contract after the Department of Transport found that the company would not reach its contractual requirements.

“Good audit and scrutiny costs money but not as much as the mistakes we make without it,” he said.

Tizard said that audit reform would be necessary “even if we were not in the position we are in with austerity and Brexit,” and concluded that there is a need to “look at the architecture for evaluating value for money”.

Walker highlighted the importance of audit in delivering a more equal society. He said: “There are communities in the country that feel wronged because spending has not been mapped effectively.”

The report said government spending decisions “fail to register what the public experiences are, too often neglect, fairness, including gender, ethnicity and geographical balance.”

Meg Hiller, chair of the Public Accounts Committee and speaker at the event, hailed the importance of evaluating the expenditure of taxpayers’ money and noted that: “In some ways, the PAC only scrapes the surface”.

Hillier claimed that using technology could improve public trust in spending decision. She suggested opening up government data using techonolgy “to show exactly where money is spent”.

Read Walker and Tizard’s blog for PF on the need for revisions around public audit.

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