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Audit Commission closure to save £1bn – DCLG

Four years on the from the original announcement, the green light has been given to close the Audit Commission – which the government says will save over £1bn in costs and cut the number of “bureaucratic” public bodies.

According to local government minister Brandon Lewis, the decision to close the Audit Commission has already led to savings of £400m, so the government is on track to save £1.2bn over 10 years.

Following the passing of the Local Audit & Accountability Act in January 2014, which will create new local audit procedures to scrutinise councils and other local authorities, the government says it will implement reforms for a “more robust, accountable and efficient way of holding local councils to account”.

After the Audit Commission goes, there will be a new framework for local public audit, due to start after the Commission’s current contracts with audit suppliers end in 2016/17 (or potentially in 2019/20 if all the contracts are extended). A transitional body will oversee the contracts in the intervening period.

Audit CommissionchairmanJeremy Newman said earlier this year: “Now that the Act has received Royal Assent, it provides clarity to our staff about the future. Since August 2010, we have been working constructively with the Department for Communities and Local Government (DCLG) and others to prepare the new arrangements.

“We have delivered significant savings for the public purse, remain fit for purpose and are committed to delivering our core business until 31 March 2015. That core business includes managing the £85m per year local public audit market, which oversees some £200bn of public money.”

The government abolished the Audit Commission’s inspection regime and, in 2012, its audit practice was outsourced to private audit firms.

Lewis said: “The decision to abolish the Audit Commission was because it was a wasteful, ineffective and undemocratic. What should have been a voice for taxpayers became a creature of the central state.

“Our new law will replace this old-fashioned quango by passing power down to people through more local choice and transparency. Better local audit arrangements will replace central dictat and as a result we remain on track to save taxpayers £1.2bn.”

According to the DCLG, outsourcing all the Audit Commission’s in-house local public audit work to the private sector has led to a 40% reduction in council audit fees. It has also left a small residual Commission staff to oversee the outsourced contracts until the Commission closure is completed and the contracts transferred.

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