Pickles scraps council spending watchdog
Updated on 13 August 2010
The Audit Commission, which is responsible for ensuring that local councils deliver value for money, is to be scrapped. Communities and Local Government Secretary Eric Pickles tells Channel 4 News he is "appalled" at the way the news was leaked in an email to its 2,000 staff.
Communities and Local Government Secretary Eric Pickles said the Audit Commission had "lost its way".
Whitehall's spending watchdog, the National Audit Office, will take over the commission's inspection duties, while its in-house audit practice will be transferred to the private sector.
The announcement that the Audit Commission is to be disbanded had been due to be made tomorrow, but was brought forward after details were leaked.
Defending the decision, Communities and Local Government Secretary Eric Pickles told Channel 4 News that the Audit Commission was already planning to move into the private sector.
He said: "They were already doing this. They were doing this because they recognised that the cost of their services was too expensive. They would not have been, themselves, looking to go out into the private sector. They would not, themselves, already be talking to large accountancy firms about being sold out."
Reacting to a leaked email detailing plans to scrap of the commission, Eric Pickles told Channel 4 News "I am appalled that the Audit Commission did that. That's the reason why I gave them plenty of notice so that they could tell their staff today. There would have been an announcement tomorrow.
"I told them this morning at 10 o'clock, and I would expect a caring employer to have got them together and explained, not just sent something out as callous as an email."
'£50m savings' says Pickles
The Department for Communities and Local Government estimates that the changes - which are due to come into effect in 2012-13 - will save £50m.
The Audit Commission is the independent watchdog which oversees the £200bn spent by 11,000 local public bodies. It says it aims to promote value for money for taxpayers.
Mr Pickles said: "The corporate centre of the Audit Commission has lost its way. Rather than being a watchdog that champions taxpayers’ interests, it has become the creature of the Whitehall state.
"We need to redress this balance. Audit should remain to ensure taxpayers' money is properly spent, but this can be done in a competitive environment, drawing on professional audit expertise across the country.
"I want to see the commission's auditing function become independent of government, competing for future audit business from the public and private sector.
"These proposed changes go hand in hand with plans to create an army of armchair auditors – local people able to hold bodies to account for the way their tax pounds are spent and what that money is delivering."
Commission chairman Michael O'Higgins said that it had already been considering moving its audit functions into the private sector and had opened discussions with a number of major audit firms.
However he rejected Mr Pickles's criticisms of the organisation.
Speaking in a radio interview he said: "The national fraud initiative that we have run saved £200 million in its latest run - it has saved £600 million overall."
"The quality of local government has improved radically in the last 10 years under the performance regime that we have run."
John Denham, who was the minister for Communities and Local Government for the Labour party, has said he agrees the commission needed wide-scale reform. However, he opposes plans to abolish it: "The Tories' real aim is to deny the public any information about the real quality of their services so that they do not know whether they are getting value for money or not.
"Abolishing the Audit Commission opens the way for huge and unjustified variation in the quality for service from one area to another."
Sir Ian Magee, a senior fellow at the Institute for Government, recently told Channel 4 News that the Public Bodies (Reform) Bill would have to be very wide ranging to abolish quangos with statutory purposes. He cites the difficulties that the previous government had in absorbing the functions of the Legal Services Commission into the Ministry of Justice.
He adds that even a spectacular cull of quangos might not achieve the savings that the government has hoped for. One reason for this is that 80 per cent of their expenditure comes from just 15 quangos. “Theoretically you could get rid of hundreds of Non Departmental Public Bodies and you wouldn’t save a lot...
“Margaret Thatcher threatened a bonfire of the quangos,” he notes. “But by the time that Conservative government had its 18 years in office, it created as many as it abolished. Tony Blair said a similar thing and created a fair few as well.”
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Labour MP Clive Betts, chairman of the Commons Communities and Local Government Committee, said he was "astounded" at the decision at a time when councils needed to find major efficiency savings.
Speaking in a radio interview he said: "I think there is a suspicion around that there is a political motive here."
The chairman of the Commons Public Accounts Committee, Labour MP Margaret Hodge, said that they would want to examine the government's plans.
She said: "We will want to ensure that proper accountability for taxpayers' money is protected, that an open and accessible structure to ensure value for money is maintained, and that there is a clear and consistent mechanism which allows local taxpayers access to information."
Other quangos that could be set for the chop
UK Film Council
Museums, Libraries and Archives Council
Infrastructure Planning Commission
Regional Development Agencies
Qualifications and Curriculum Development Agency
General Teaching Council
Royal Commission on Environmental Pollution
Agricultural Wages Board
Agricultural Dwelling House Advisory Committees
Inland Waterways Advisory Council
Commission for Rural Communities
Alcohol Education and Research Council
Appointments Commission
Council for Healthcare Regulatory Excellence
Health Protection Agency
National Patient Safety Agency
National Treatment Agency for Substance Misuse
NHS Institute for Innovation and Improvement
National Policing Improvement Agency (NPIA)
Serious Organised Crime Agency (SOCA)
The Strategic Advisory Board for Intellectual Property policy
SITPRO (Simplifying International Trade)
Waste Electrical and Electronic Equipment Advisory Body
The British Shipbuilders' Corporation
Difficult relationship
The commission has had a difficult relationship with the new coalition government since it came to power last May. It clashed with Mr Pickles over the appointment of a new chief executive on a proposed salary of £240,000 which he vetoed.
Aides to the Communities Secretary also blamed the commission for trying to push councils towards fortnightly bin collections - something Mr Pickles bitterly opposed when the Tories were in opposition.
However the last straw appears to have been when it was said that the commission tried to resist plans requiring all DCLG bodies to publish details of all items of expenditure over £500, only for it to be disclosed that it spent £8,000 on an event at Newmarket Race course.
The future options for the commission could now include a management buy-out, or becoming a mutual which is owned by the staff.
