Audit Commission 'fulfilled goals', says watchdog chief

The Audit Commission for Local Authorities in England and Wales was established in 1983

The chairman of England's public spending watchdog has defended its work, saying it had "more than fulfilled" the goals set out for it.

Michael O'Higgins made the defence following an announcement on Friday that the Audit Commission would close.

Communities Secretary Eric Pickles said the move would save £50m a year.

Mr Pickles said: "Rather than being a watchdog that champions taxpayers' interests, it has become the creature of the Whitehall state."

The commission's 2,000 employees received an e-mail from management on Friday. A source told the BBC it came "completely out of the blue".

Local Government Minister Bob Neill said: "I very much regret the way this has been handled by the Audit Commission who just sent out an e-mail which I think is quite disgraceful.

"I would have got my staff together and said 'let's talk through this'."

'Significant successes'

Mr O'Higgins said he "regretted" the decision and listed the "significant successes" the commission has had.

Mr O'Higgins said: "The Audit Commission was set up by a Conservative secretary of state in 1983, and I believe we have more than fulfilled Michael Heseltine's ambitions when he set it up.

"In 1985-86 the commission led the investigation of the rate-capping rebellion which resulted in 32 Lambeth councillors and 47 Liverpool councillors being surcharged and banned from office.

"The gerrymandering 'homes for votes' scandal at Westminster Council was uncovered by the Audit Commission.

"In 2010 the commission carried out a corporate governance inspection of Doncaster Council in the light of 'serious concerns about the council's performance and the threat to public confidence caused by recent events', being the brutal attack on two boys by two brothers in Edlington.

"Recently over £200m of fraud has been detected through the National Fraud Initiative."

However Mr O'Higgins acknowledged "it is of course the absolute right of the secretary of state and Parliament to change the arrangements around the architecture of government, including abolishing the commission."

Mr Neill said the coalition government would strengthen the powers of local ombudsmen and that councils were now urged to publish online all expenditure above £500.

Mr Pickles said the commission's research functions would stop and councils would be able to ask private companies to carry out audits. There would also be a "new audit framework" for local health services.

He said he wanted to see the commission's auditing function become independent of government and compete for business from the public and private sector.

He 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."

Asked about job losses, he said: "In terms of people working for the Audit Commission, almost certainly we are looking for them to be able to continue in another form."

In a statement, Labour's shadow communities secretary John Denham said the move meant taxpayers would have "no coherent information" about how much value for money their local services provided.

He said: "The Audit Commission doesn't just look at the cost but at the quality.

"Without the function of the Audit Commission there will be no-one to step in when a council is failing, as Doncaster was recently.

"This move by the government shows they are only interested in the cost of everything and the value of nothing."

Earlier, Clive Betts, Labour, chairman of the Communities and Local Government Select Committee, suggested to BBC Radio 4's PM programme there might be a "political motive" behind the move - saying there were "quite a few Labour people" including former councillors on the body.

The watchdog has offices in London, Bristol, Leicester, Solihull, Stevenage, Bolton, Gateshead, Leeds and Exeter.