Audit and inspection of local authorities - Communities and Local Government Committee Contents


7  National Value for Money studies

The studies programme

94. The Audit Commission has a statutory duty to carry out studies into the impact of central government legislation, regulation and direction on the ability of local authorities to deliver value for money.[151] In 2009-10 the Audit Commission spent about £5m on some 24 national studies—an average cost of approximately £200,000. It has since scaled back its programme to around £1m for 2010-11. The studies have covered a wide range of topics in many sectors as well as cross-sectoral studies. The topics include those that would be readily recognised as value for money, such as fraud and pensions, and those that, at least initially, might not be, such as migration, domestic abuse and road safety. A small number of studies have been undertaken jointly with the NAO.[152]

Their value

95. The Audit Commission's view is that "our national studies define value for money and how it can be improved"[153] providing valuable, in depth and independent research. The reports are not primarily designed to pass judgements retrospectively but to look for future improvement. The Commission's view is that, particularly at a time of public sector spending cuts, the loss of its expertise on value for money is "counter-intuitive" and that other organisations will not be able to replicate it. [154] Its Chairman cited Are we there yet? and Tired of hanging around as recent examples demonstrating that the Audit Commission was prepared to criticise central government as well as local government.[155]

96. In its written evidence to our inquiry the Department for Communities and Local Government noted the Audit Commission's research programme but made no comment on its quality or usefulness. In oral evidence, the Minister criticised the studies for being overly prescriptive in their definitions of what constituted value for money.[156]

97. The Local Government Association's observations on the national value for money studies were critical. In particular, it said that, despite consulting the Local Government Association, the Audit Commission's programme had not sufficiently reflected the needs of the sector and that "the Commission's apparent desire to grab the headlines" had distorted the overall message on occasions.[157]

98. Individual witnesses and organisations pointed to specific reports that they felt had been of value in their sector. APSE, for example, praised the report Positively charged for highlighting the lack of corporate charging strategies in a high proportion of councils.[158] Age UK said how valuable Don't stop me now and Under pressure had been. Age UK had produced similar reports itself, but was concerned about accessibility of the information.[159] A further constraint—for several of our witnesses—was funding to undertake such studies.[160]

99. The TaxPayers' Alliance supported the approach of diverse reports by non-governmental organisations; its CEO did not feel the Audit Commission reports had the same impact or themselves provided value for money. Professor Seddon argued that value for money was a beguiling concept—hard to disagree with yet difficult to define operationally. He was critical of the Audit Commission for prescribing solutions which, though plausible, had sometimes turned out to be wrong and excluded other approaches which did not fit with their preconceptions. He pointed to the 2005 report on housing benefit[161] which according to APSE, the Audit Commission revised in 2008.[162]

NAO to take on the role

100. The Government has proposed that responsibility for VfM studies should pass to the NAO, which would be able to undertake reports using its existing powers, once confirmed by the Treasury.[163] The Minister told us that the Government also expects to see research undertaken by a wide range of organisations, and such research could be more expert and powerful. He cited work by Shelter as having had impact. He welcomed a plurality of views.[164]

101. The NAO has an existing annual programme of around 60 VfM studies and a budget of around £20m.[165] The C&AG saw no problem with the NAO taking on this additional role although he said that he would need to assess the need for additional resources.[166] The C&AG was confident that the NAO already had expertise in the local government sector and could strengthen its capacity if required.

102. The Local Government Association would like to have greater involvement in future value for money studies, and for the programme to be smaller and of high quality. It suggests that, instead of simply passing to the NAO, the studies should be linked to the productivity programme of the Local Government Group. They could be funded by top slicing of revenue support grant or savings from abolition of the Audit Commission.[167]

103. Over the years the Audit Commission has produced some of useful national value for money studies, but the programme has become excessive and not sufficiently linked to the needs of the sector. Not all the studies have proved helpful or, at £5 million a year, themselves provided value for money. We believe that a smaller, more selective programme would be better. It would be wrong for one part of public expenditure—local government—to be excluded from VfM assessment and the National Audit Office should ensure that local government services and expenditure are given due weight in its studies programme. Provided that the National Audit Office has, or acquires, the necessary expertise in local government matters, there may be some advantages to having a more unified approach to reporting on public expenditure across both local and central government. Additionally, we welcome reports by a diverse range of organisations, including those from outside government, and recommend that the National Audit Office, Local Government Association and Department for Communities and Local Government encourage collaborative working and seek to ensure information is made available to all serious researchers. The NAO and LGA should lead on devising a coherent programme that adequately covers priority topics and avoids undue overlap.

104. The proposal for the National Audit Office to take on this role is workable and, as we note above, may have some advantages over the existing arrangements. However, the way in which the announcement was made did not show a proper respect for the constitutional position whereby the Comptroller and Auditor General, the head of the NAO, is an officer of Parliament, and the funding for NAO work is granted directly by Parliament, through the Public Accounts Commission, rather than by Government. It is not for the Secretary of State—any Secretary of State—to transfer work to the National Audit Office without proper consultation with Parliament first.

105. The transfer of responsibility for national value for money studies to the NAO involves a transfer of costs from DCLG to Parliament. We recommend that the Comptroller and Auditor General make an assessment of what it will cost to ensure that the NAO is able to carry out an adequate programme of VfM studies of local government expenditure; that he discuss his requirement for the necessary resources with the Public Accounts Commission; and that DCLG make a clear transfer of the necessary resources to the Public Accounts Commission from the savings from the abolition of the Audit Commission.


151   Ev 161 Back

152   For example, A review of collaborative procurement across the public sector, 21 May 2010. Back

153   Ev 167 Back

154   Ev 166 Back

155   Q 205 Back

156   Q 597 Back

157   Ev 139 Back

158   Q 346 Back

159   Qq 322-323 Back

160   Qq 325-328 Back

161   Q 342 Back

162   Q 335 Back

163   DCLG Consultation doc, para 1.28 Back

164   Q 597 Back

165   The NAO's Annual Report 2010 says that 24% of resources were used on value for money work and 63 reports were published. The value for money budget is not stated in cash terms but, on the basis of 24% of a total budget of £94.6 million, this suggests £22.7 million spent on value for money; divided by 63 reports, this suggests an average of £360,000 per report. Back

166   Qq 500-501 Back

167   Ev 140 Back


 
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Prepared 7 July 2011