Written evidence submitted by the Taxpayers
Alliance
SUMMARY
— The
TaxPayers' Alliance welcomes the abolition of the Audit Commission.
It has placed an unnecessary and costly burden on local authorities
and stifles competition.
— The
auditing of local authority accounts should be transparently tendered
out to the private sector, to help drive down costs and to ensure
independent decision making that is accountable to taxpayers.
— There
should be no body or organisation formed to carry out compliance
functions, as this was perhaps the most egregious and costly of
the Audit Commission's activities.
— The
TaxPayers' Alliance believes that full and useful transparency
will be a very powerful tool to hold local politicians and council
staff to account, to run alongside traditional financial auditing.
THE AUDIT
COMMISSION
Problems
— The
Audit Commission was an instrument of central government, finding
new and increasingly bureaucratic ways of controlling local councils.
The Audit Commission has incrementally been handed—and lobbied
for—greater powers, which have seen it stifle innovation
at a local level in favour of meeting centrally prescribed targets.
The TaxPayers' Alliance welcomes its abolition.
— Centrally
set targets do nothing to improve local services. Systems like
star-ratings—once described as "disrespectful and utterly
perverse" by Vince Cable[41]—graded
local authorities with stars, which were boasted about by local
authorities but roundly ignored by everyone else. They made authorities
compete in the wrong way; not by benchmarking service quality
and efficiency, but so as not to be graded lower than their neighbouring
authorities. Consequently, these targets—stars, flags or
otherwise—do nothing to improve services, they merely undermine
their performance. Councils became obsessed with compliance and
fearful of poor Audit Commission reports. The Audit Commission
should have stuck to its primary job and it clearly strayed too
far outside of its remit.
— The
cost of the Audit commission in 2009-10 was £220.3 million.
Scrapping this body will obviously not save all of this money,
as councils will still have to pay for the cost of auditing. But
significant savings will be realised as the Audit Commission costs
over £50 million to administer and staff.
— However,
there should be additional savings too. For example, the cost
of complying with Comprehensive Area Assessments (CAA's) is estimated
to be in excess of £300,000 for some councils. Local authorities
were under great pressure to meet the targets set so felt that
they had no choice in paying.[42]
Solutions
— The
TaxPayers' Alliance welcomes the decisions to scrap Comprehensive
Area Assessments and to abolish the Audit Commission. We believe
the Department for Communities and Local Government have worked
quickly to strip out bureaucracy and give councils more freedom.
We feel that councils should have more revenue raising powers
but some important steps have been taken to give local people
a greater say on how their local services are run.[43]
— To
that end, it is crucial that the Audit Commission is not simply
replaced by another bureaucratic quango.
— The
TPA agrees that auditing should be tendered out to the private
sector. This has the clear benefit of opening up the service to
competition. Local authorities have had auditing enforced on them
by one organisation; if they have choice then this will help drive
down costs. For example, the costs of auditing Birmingham Council's
accounts in 2009-10 was £1.2 million, a council with an income
of £2.5 billion,[44]
compared to the £0.6 million spent by the entire HMV group
on auditing fees in 2009-10,[45]
an organisation which has private revenues of over £2 billion.
While admittedly this is not a like-for-like comparison, the difference
between the two costs cannot be ignored. The doubling of the costs
makes a strong case for seeking private firms to audit local authority
accounts.
— There
has been concern that private auditors would not necessarily be
independent from Government. This apprehension is warranted, as
cosy relationships between public bodies and private companies
can and do happen. To ensure the independence of the auditors
and to continue the agenda of transparent government, it would
be vital that the tender process of selecting an auditing firm
was an open and public process.
— The
TPA strongly believes that fully transparent government—though
currently in its infancy—will in time provide local taxpayers
with genuine tools to hold elected politicians and council staff
accountable. Centrally set targets do not work for different councils
with residents that require completely different services over
and above core provisions. There should absolutely be no new body
or organisation that carries out a compliance function on behalf
of the Government.
LOCALISM
Problems
— The
centralised nature of British Politics has bred and assiduously
maintained a culture of "Government knows best". One
major failing of this is that local people are being told how
their services should be run by politicians who do not have a
true understanding of issues in their local area. The Audit Commission
was part of this and subsequently did absolutely nothing to nurture
innovation at a local level; it merely fostered compliance and
local authorities suffered as a result.
Solutions
— To
create a more efficient local government structure in the UK,
local authorities must feel that they are accountable to the people
who both elect them and pay their salaries. This is only possible
if local authorities are given more independence and freedom from
centralised and standardised requirements. The system under the
Audit Commission was that local authorities were not met with
substantial repercussions for failure. The audit commission can
grade a council, however this is meaningless to local residents,
and priorities will naturally be different across council boundaries.
— Much
of what affects residents should be decided at a local council
level. Decentralising the balance of power to local authorities
makes for cheaper and more efficient governance.[46]
TRANSPARENCY
Problems
— The
Audit Commission worked in an era of obfuscation and opaque governance.
This meant that they have been the sole arbiters of council spending.
Taxpayers' deserved—and continue to deserve—much better.
Solutions
— The
abolition of the Audit Commission complements the measures already
taken to increase transparency throughout local government. The
decision to publish all spending over £500 allows local residents
access to scrutinise the spending of their councils and effectively
hold them to account. This can be done in tandem with examination
of local authority annual statement of accounts which, while more
detailed in recent years, still need to be more comprehensive
and accessible.
— One
major stipulation that the TPA would make is that the publication
of any information must be in a practical and serviceable format,
user friendly to the local residents and easily available online.
The publication of data will lead to the creation of armies of
armchair auditors, which ultimately comes at very little cost
to the taxpayer.
— The
oversight and inspection of local authority performance is not
a role that requires heavy spending from central or local government.
Civil society is the most effective and proven guardian to watch
over council spending and performance. Those who pay for and use
the services will be more concerned about how their money is spent
and how their services perform than a public sector body. Through
empowering local people to challenge underperformance, councils
can establish a self reviewing system which can fill the void
left by the audit commission at a much reduced cost.
January 2011
41 http://www.guardian.co.uk/politics/2010/aug/13/audit-commission-to-be-scrapped Back
42
http://conservativehome.blogs.com/localgovernment/2009/12/wandsworth-and-hf-councils-quit-costly-
inspection.html#tp Back
43
www.taxpayersalliance.com/Localism.pdf Back
44 http://www.birmingham.gov.uk/cs/Satellite?c=Page&childpagename=SystemAdmin%2FCFPageLayout&cid=1223324977479&packedargs=website%3D4&pagename=BCC%2FCommon%2FWrapper%2FCFWrapper&rendermode=live Back
45
http://2010hmvgroup.ry.com/Accounts_and_Downloads/Default.aspx Back
46
http://www.cps.org.uk/cps_catalog/A_Magna_Carta_for_Localism.html
http://www.cps.org.uk/cgi-bin/sh000004.pl?REFPAGE=http%3a%2f%2fwww.cps.org.uk%2fcps_catalog%2fA_Magna_Carta_for_Localism.html&WD=good%20guide%20council&PN=Catalogue_The_New_Good_Council_Guide_61.html%23a56#a56 Back
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