The Audit Commission: guiding, steering and regulating local government
| Date | 01 September 2003 |
| Published date | 01 September 2003 |
| Author | Josie Kelly |
| DOI | http://doi.org/10.1111/1467-9299.00356 |
Public Administration Vol. 81 No. 3, 2003 (459–476)
© Blackwell Publishing Ltd. 2003, 9600 Garsington Road, Oxford OX4 2DQ, UK and 350 Main Street,
Malden, MA 02148, USA.
THE AUDIT COMMISSION: GUIDING,
STEERING AND REGULATING LOCAL
GOVERNMENT
JOSIE KELLY
How does the non-executant state ensure that its agents are fulfilling their obliga-
tions to deliver nationally determined policies? In the case of elected local govern-
ment in England and Wales, this function is carried out by the Audit Commission
(AC) for Local Authorities and the Health Service for England and Wales. Since
being established in 1983, it is the means by which local authorities are held to
account by central government, both for its own purposes and on behalf of other
interested stakeholders.
Although the primary function of the AC is to ensure that local authorities are ful-
filling their obligations, it does so by using different methods. By acting as a regula-
tor, an independent expert, an opinion former and a mediator, the AC steers local
authorities to ensure that they are compliant with the regulatory regime and are
implementing legislation properly.
INTRODUCTION
In the UK the state’s regulatory activities have expanded considerably to
include the monitoring of public service organizations, despite the tendency
for governments to deregulate (Moran 2001; Hood et al. 1998, 1999). Regula-
tion, of course, is neither a new nor an unusual experience for some sections
of government. Local authorities, the focus of this paper, have been regu-
lated by central government since the mid-nineteenth century. However, the
expansion of state regulation of local government in the recent past has
expanded from earlier forms of oversight, to ensure councils exercise prob-
ity and legality, to a mechanism whereby the government takes steps to
ensure that its agents are fulfilling their obligations to various stakeholders.
Regulation, however, is a multifarious concept and is used interchangeably
with concepts that are associated with specialist practices such as audit,
inspection and scrutiny (Boyne et al. 2002b). Regulation is also practised
through advice and guidance from regulatory bodies, professional organiza-
tions and government departments on how organizations should act in order
to comply with the regulatory regime. The focus of this paper is how these
different approaches are applied interchangeably by the Audit Commission
for Local Authorities (hereafter AC) and the Health Service for England and
Wales in its relations with local authorities by adopting different roles, as a
regulator, an independent expert, an opinion former and a mediator. By
Josie Kelly is Lecturer in Public Management at Aston Business School, Aston University.
padm_003.fm Page 459 Saturday, July 26, 2003 5:40 PM
460 JOSIE KELLY
© Blackwell Publishing Ltd. 2003
way of context, the paper starts by discussing the recent growth in the
regulation of local government by the state as a consequence of the new
public management (NPM) and the role played by the AC as an early sup-
porter of this doctrine. This is followed by a consideration of how traditional
and more recent trends in auditing practices are deemed by successive
administrations to enhance the accountability of the lower tiers of govern-
ment.
The paper draws from the findings of a research project carried out in
2000/2001 which examined how elected and non-elected local government
practitioners perceived the relationship between local authorities and the
AC. In total 52 elected practitioners and 67 non-elected practitioners from all
types of local authorities in England were interviewed. In addition, interviews
were held with 17 key informants from the AC, the District Audit, local
government specialists from private sector auditing companies and Best
Value Inspectors. For context and to provide background, a comprehensive
documentary survey was carried out, which included textual analysis of
AC publications, government papers, such as select committee evidence
(HC 174), and the quinquennuial reviews of the AC (Butler 1995; Watt and
Delay 2000).
THE AUDIT COMMISSION AND NEW PUBLIC MANAGEMENT
It is well-known that the tenets of NPM first emerged from private sector
practice, popularly summarized for public sector practitioners by Osborne
and Gaebler’s Reinventing Government (1992). That public management was
undergoing significant change was also recognized by academics. Hoggett
(1991), for example, considered the case for public bodies to focus more on
strategic goals, rather than just delivering services. Hood (1991; see also
Burns et al. 1994) notes that the accountability of public service organizations
was increasing by judgements made on their achievements, usually by
performance measurement of outputs and outcomes. Foster and Plowden
(1996) note the perniciousness of producers, political or other bureaucratic
interests in the supply of public goods and services. They also emphasize
how public bodies may serve consumers better by encouraging greater
actual or quasi competition, either by privatization, contracting out or by
employing outside contractors (McSweeny 1988; Stewart and Walsh 1992).
Such messages were carried into the local government community by the
AC’s actions to fulfil its responsibility to ensure that councils provided value
for money in their management of public funds (Kimmance 1984). Following
legislation which required councils to provide performance indicators, and
to encourage improvements, the AC used comparative studies and league
tables of councils. Its guidance provided a framework for auditors carrying
out local value for money (VFM) studies. More recently (see for example
Audit Commission 1996, 2001b), the AC has focused on the management
and corporate governance of local authorities. The AC also provided advice
and guidance to councils on legislation that affected the management of
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