The public must be assured its money is being well spent

As the public faces higher taxes, fundamental revisions are needed to public audit, argue John Tizard and David Walker. 

At a time of corrosive mistrust in parliament and public affairs, the National Audit Office stands solid.

Under Amyas Morse it enjoys near mythical status as an honest and rigorous analyst of how public money is spent.

His appointment ratified by parliament this week Gareth Davies is taking over an institution rightly held in the highest regard by media and public.

But let’s not get carried away. Public audit and its institutions get hardly any discussion.

The NAO has not been externally reviewed for a long time. What if arrangements aren’t entirely perfect, especially in the NHS and local government, where the NAO’s writ doesn’t run in any detail?

Sir John Kingman uncovered the can of worms that is corporate auditing; his hard-hitting review of the Financial Reporting Council has consequences for public audit not least in his criticism of the private accountancy firms who also do NHS trust and local government work.

Who scrutinises the NAO? Kingman asked pointedly.

Say the government at Westminster were to change; in present political circumstances anything is possible.

Would a successor to Theresa May’s Tories be content with a mission statement that encompassed efficiency and effectiveness but not equity?

‘Fairness in spending matters as much as economy. If austerity lifted, it becomes even more important to ensure we get value for the public pound.’

Fairness in spending matters as much as economy. If austerity lifted, it becomes even more important to ensure we get value for the public pound.

Yet local government auditors (not just in Northamptonshire) are conspicuous by their silence; NHS auditors help sustain a fantasmagorical structure of payments, contracts and subventions; they work in dysfunctional isolation from the NAO as external auditors of central government. 

It’s high time we had an open, public debate; it is or at least shouldn’t be technical territory.

The public are going to be asked to pay more tax – to cover the costs of ageing, the impact of technology, better services and the reconstruction needed post Brexit.

They must be assured the money is well spent. The political right makes efficiency its badge and the left equity. Both have to be accounted for if confidence in government is going to be recaptured.

In a new pamphlet for the Smith Institute*, we call for a radical rethink. First, spending decisions must be pre-screened.

We join the Institute for Government and Lord Kerslake in calling for an evidence-rich procedure for evaluating the deliverability of projects – and who benefits from them.

There are welcome signs that shadow chancellor John MacDonnell recognises the Treasury isn’t just the controller of spending: it must pursue spend through to the everyday encounters the public have with employment and benefit services, schools, clinics, policing and care, evaluating equity and effectiveness.

Value for money work should be unified in a single body for the whole of the public sector in England, comparing and contrasting procurement and performance in the NHS, Whitehall and local government – and liaise much more closely with auditors in Scotland Wales and Northern Ireland.

So much valuable comparative information is squandered because VFM is fragmented.

We propose to relocate the VFM work that the NAO now does – much expanded in recent years – into the new office, freeing the NAO to focus on audit quality.

The same firms found in the Kingman review of the private sector to have fallen down on the job of auditing companies are unlikely to be beyond reproach in their work on council and health trust accounts.

What happened to public interest reporting? Where are the auditor red flags, even in the deepest despond of austerity? We recommend a repurposed and refocused NAO taking muscular responsibility for the quality and supervision of audit across the public sector in England.

Of course reform isn’t going to be straightforward; it involves constitutional niceties.

This week it was MPs who approved Gareth Davies’ appointment; he is an ‘officer of parliament’.

But as the stresses and strains of Brexit play out opportunities will arise to rethink roles and responsibilities. That has to include the way decisions to tax and spend are taken, on what credible evidence, with what follow up.

Public money will always be precious because it is scarce. More is required – look at the array of problems facing the UK in the decade to come. But voters will assent to the consequent increases in taxation only if they are assured we can manage and account for public money better.