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A new Bill setting out measures to close the Audit Commission and establish new arrangements for the audit of local bodies was part of Her Majesty The Queen's State Opening of Parliament yesterday.

The draft Audit Bill will be published during the summer for pre-legislative scrutiny. It will be debated by MPs as soon as Parliamentary time allows. The legislation would free local councils and other public bodies to appoint their own independent auditors from an open and competitive market.

The local audit reforms, together with the end of inspection work and the disbanding of the Commission, would save the public purse around £650 million over five years.

A more transparent and accountable local public audit framework based on the private sector model would be established in the Audit Commission's place. National Audit Office oversight would maintain high standards of scrutiny over public money.

Ministers first announced plans to formally close down the Audit Commission's centralised inspection regime in 2010.

Local Government Minister Grant Shapps said:

"This new Audit Bill will allow us to formally close down the centralised Audit Commission and replace it with a more streamlined and competitive local system.

"Putting councils in control of their own auditing affairs will save the public purse £650 million over five years and bring about the new arrangements that increase their public accountability."

Notes to editors

1. Text from Her Majesty The Queen's State Opening of Parliament speech:

"A draft Bill will be published setting out measures to close the Audit Commission and establish new arrangements for the audit of local public bodies."

2. Around 11,000 local public bodies are audited under the Audit Commission's regime, including local government, health and police bodies, national parks authorities and passenger transport executives. Smaller bodies are handled separately from larger bodies.

3. The draft Audit Bill would aim to:

• give local public bodies the freedom to appoint their own auditors from the private sector, on the advice of an independent panel;
• establish a new regulatory framework for local public audit, mirroring that in the private sector;
• transfer responsibilities to the National Audit Office to set the scope of local public audit and produce supporting guidance for auditors.

4. The Audit Commission's central inspection regime has been halted saving around £45m a year. Outsourcing of the Commission's in-house audit practice to the private sector has also commenced. This will deliver 40 per cent fee reductions for councils when the contracts commence in September 2012 saving local bodies an estimated £250 million over 5 years. A small residual Commission to oversee the outsourced contracts until the Commission is formally abolished. www.communities.gov.uk/news/newsroom/2099373.

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