Audit Commission

Lord Harrison Excerpts

Thursday 14th October 2010 Lords Chamber

Asked By

[Lord Harrison]

To ask Her Majesty’s Government how the functions of the Audit Commission will be replaced following its abolition.

[The Parliamentary Under-Secretary of State, Department for Communities and Local Government (Baroness Hanham)]

My Lords, subject to Parliament enacting the necessary legislation, local audits will be regulated within a statutory framework overseen by the National Audit Office and the audit profession. Councils will appoint their own independent external auditors and there will be new audit arrangements for local health bodies. The commission’s in-house audit practice will be moved to the private sector and other functions of the commission will cease or become the responsibility of auditors or other existing bodies.

[Lord Harrison]

Why, without consultation and at a time of financial retrenchment, do the Government abolish the established Audit Commission, whose value is demonstrated by its extracting value for money when public money is spent on the National Health Service and in the local authority sector? Does the Minister agree with the ACCA and with CIPFA that what will happen if we give this to private audit firms is that there will be many more conflicts of interest; that often they will have no appetite to take up the work; and worst of all, that the independent voice of the Audit Commission, which was able to criticise government, will be lost? Has not the pretty Mr Pickles got the Government into yet another pretty pickle?

[Baroness Hanham]

My Lords, in the current financial climate, it makes absolutely no sense for Whitehall to own the fifth largest audit practice in Britain, particularly when it provides services that can readily be obtained in the private sector. The commission’s monopoly on appointing local auditors weakens competition and also weakens the localism that should be available to local government. Certainly in my time in local government, one of the things that irritated me most was the fact that you could not choose your own auditors. Now there will be much better and more open ways of doing that.