Councils updated on government plans for Audit Commission

Local councils were today updated on Government plans to secure a value for money transfer of the Audit Commission's in-house practice into the private sector, Local Government Minister Grant Shapps has announced.

In August last year the Secretary of State for Communities and Local Government announced plans to disband the Audit Commission and refocus audit on helping local people hold their councils and other public bodies to account for local spending decisions.

Since then ministers have been examining the most cost effective options for disbanding the Audit Commission, transferring audit into the private sector and allowing local authorities to appoint their own auditors. In a letter from the Department's Permanent Secretary today councils were told that ministers' initial view is that the best value for money option is to outsource all the audits currently undertaken by the in-house practice to the private sector.

In order to ensure that progress can be maintained on the options, ministers have asked the Audit Commission to begin substantive preparatory work for outsourcing the 2012/13 audits. The Commission has been asked to design a procurement process that allows a range of firms to bid, including the possibility of an in house bid which could form the basis of a new employee owned mutual.

If ministers do choose to opt for outsourcing all the 2012/13 audits, this would mean the Commission would be radically reduced by the end of 2012, leaving a small residuary body overseeing the contracts until local public bodies are in a position to appoint their own auditors.

Shapps said:
"This Government has set in train measures to radically scale back centrally driven, bureaucratic and costly inspection and auditing, saving council taxpayers money.

"We are working closely with the Audit Commission on options to transfer the audit practice into the private sector. Our initial view is that outsourcing could prove the best value for money and we have asked the Commission to start work on paving the way for outsourcing the 2012/13 audits to keep this option open before we make a final decision."

"We are determined to make sure that councils and other local bodies' interests are fully taken into account in any transition."

The work that the Audit Commission has been asked to undertake signals further progress towards disbanding the organisation. A final decision on the future of the in-house practice will be announced shortly.