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Former audit chief, Sir John Bourn, speculates on the future of the audit service after the abolition of the Audit Commission, and wonders what prompted the Government to axe it The decision to disband the Audit Commission illustrates two continuing features of the British constitution... namely, flexibility and continuity. First, flexibility. In many countries, arrangements for the audit of public expenditure are enshrined in the constitution, and cannot be altered simply by an executive decision three months after a change in government. Change in British government can sometimes move at a glacial speed. But sometimes, as here, change comes as a stroke of lightning; And, second, continuity. Before the Audit Commission's foundation in 1983, some boroughs had the right to choose a system of professional audit under the Local Government Act 1933. So, in deciding that local authorities will be able to approve their own auditors from professional firms, the Government is turning back to a system which previously applied to some parts of the local authority system. What goes around, comes around. Another interesting feature of the change is that it applies only to England. The Audit Commission's writ did not run in the devolved administrations, so no changes will be needed in Scotland, Wales and Northern Ireland. Here, we have another underlining of the fact that while the UK claims to be a unitary state, substantial and growing differences exist between public administration in its four parts. Why the change? The Government intends to maintain ‘robust auditing', in the secretary of state's words on 13 August. But, communities secretary, Eric Pickles added: ‘Ministers believe that the work of the commission has increasingly become less focused on accountability to citizens and more on reporting upwards to the Government, judging services largely against top-down Government-imposed targets.' In the Government's view, abolishing the commission will reduce bureaucracy, save £50m a year and, according to Bob Neill, the minister for local government, is logical follow on from the Government's review of all quangos. The idea is that local authorities will have to convince their residents and voters – not Whitehall – that they act within the law and provide value for money. And this mirrors ideas that the Government has voiced for more public concern and activity by local people in focusing on what they can do for their own communities, the Big Society. How will it all work out? Of course, at this stage, nobody knows. The idea is for the new system to be in place by 2012/13, but details have to be worked out. For example: a new audit framework will be needed for local health bodies the precise duties of the National Audit Office in taking an ‘oversight role' – see the government announcement on 13 August what happens to the Audit Commission staff. What Mr Pickles meant on 13 August was that the commission's audit function should become independent of government, ‘competing for future audit business from the public and private sector'. But what private sector business did the he have in mind? Mixed views abound. The Association of Chartered Certified Accountants says the change appeared ‘costly, compromised and prone to conflicts of interest'. There is no doubt that the quality of the commission's financial audit, provided by a mixture of its own staff and private sector contractors, was of the highest quality, as was its pioneering role with other public sector auditors in the methodology of VFM audit. And it was a private sector auditor with an Audit Commission appointment which fought hard and successfully to bring out the failings of Westminster City Council public sector housing arrangements. Perhaps the real reason for change, from a minister with long personal experience of local government, was that the commission had come to be perceived, rightly or wrongly, as more of an instrument of Whitehall than a truly independent auditor, outside politics. And an auditor must be exactly that – not a regulator, not an overseer, not part of the executive. Perhaps the commission, like Icarus, seemed to fly too close to the sun. And paid the penalty. Sir John Bourn is former head of the National Audit Office.

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WHITEHALL

Did the commission fly too close to the sun?

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