Minister claims abolition of Audit Commission is 'on track'

THE DOOMED Audit Commission was accused of being “old fashioned”, “centrist” and “unwieldy” in a furious outburst at Westminster from housing and local government minister Grant Shapps.

He told a Commons watchdog committee: “It is time to do this better, more efficiently, more locally, more transparently and with better value for money”.

Shapps, speaking at a meeting of the housing and local government committee, continued the angry war of words with an attack on Audit Commission chairman Michael O’Higgins over the timetable for the department’s abolition with O’Higgins’ claim it would retain some powers “until at least December 2013”.

The minister insisted: “I don’t recognise that timetable. I would point out to the committee that there could be a vested interest in extending the timetable if you happen to be involved in the organisation.

“We are very much pushing ahead with this.”

Shapps refused to be tied down to dates because a consultation had to be completed, the government reach conclusions, a draft bill drawn up and a slot found in the Parliamentary agenda for the eventual legislation, but he insisted: “It is running on track… We are progressing it in the proper manner.”

He attacked the commission for briefing its staff ahead of the government announcement, adding: “It would be helpful if the Audit Commission themselves stopped briefing the weekend press on rumours.”

Warned by one MP the commission might have to rehire staff, he said it must act to fulfill its statutory duties and ministers would not interfere “apart from when the secretary of state blocked the £240,000 asked for the chief executive’s salary“.

He went into the hearing armed with evidence of the commission’s profligacy (spending £53,000 on designer chairs at £900 each) and criticising it for adding a 20% surcharge on its own audit fees for local authorities “and a 20% surcharge on private auditors’ fees too” to cover its costs.

But he flatly refused to detail how the government’s claim that abolishing the commission would save £50m is made up, insisting this was a “ballpark” estimate and that a formal projection would be produced in an impact assessment when legislation is published.

Shapps said his criticism was directed at the commission management, not the audit work carried out, suggesting its expert staff would find re-employment with the private sector or that this arm of the commission could be mutualised and compete with the private sector for local authority audit business.

He evaded questions about whether restrictions would be imposed to prevent a mutualised body being bought up by one of the Big Four but agreed on such restrictions as a five-year term, with only one repeat, for audit firms and a seven-year limit for audit leaders. Earlier National Audit Office chief Amyas Morse said his deparment would be able to carry out a supervisory role under the reform for less than £5m.

He revealed he was informed in advance of the announcement of plans to abolish the commission but not consulted.

He told the committee: “I think the proposals put forward are also possible. Difficult but practicable.”

But he warned MPs to insist local authorities are required to have audit committees with a majority independent of councils to decide on the appointment of an auditor.

Morse confirmed that since the NAO is funded directly by Parliament, work passed to it would represent a “saving” to the housing and local government department’s budget.

(Picture of Grant Shapps © Department for Communities and Local Government)