Financial fears as axe falls on Audit Commission

The government has said the commission - which manages audit of all NHS organisations except foundation trusts - could be scrapped within two years.

We will potentially lose the ability to take an overview across the whole system, for example for opportunities for improvement

However the Department of Health has suggested the commission’s primary care trust audit role will continue until the last one is abolished, which could take considerably longer.

Audit Commission chair Michael O’Higgins told HSJ the move could make it more difficult for the DH to oversee good financial management and avoid deficits in PCTs as managers focus on their own futures at a time when NHS funding growth is due a radical cut.

He said the impending abolition of PCTs combined with that of the commission could result in its own authority, and with that financial control itself, slipping.

Mr O’Higgins said: “One of the risks is people start focusing on what happens to themselves next. That is a risk and there is a considerable amount of uncertainty created there.”

The decision to abolish the commission is unlikely to calm Treasury concern over the control and scrutiny of NHS funding once the bulk of it is transferred to GP commissioning groups.

The commission had been expected to play a leading role in developing the financial accountability framework for GP commissioners.

Mr O’Higgins agreed financial control for GP consortia was particularly unclear and with the hope that the commission would be able to help the government develop it.

“There are issues around the GP contract, how the consortia are organised and what the accountability arrangements are. We are not going to be abolished tomorrow, and we probably have more expertise to offer than anybody else,” he said.

NHS leaders also fear potential growth in fraud, and loss of benchmark information and support for improving financial management.

NHS Confederation acting chief executive Nigel Edwards said the impact of the abolition would only become apparent in two or three years. He said: “We will potentially lose the ability to take an overview across the whole system, for example for opportunities for improvement.”

Next month the commission will publish its latest 2009-10 value for money performance scores for PCTs and trusts - known as “use of resources” for PCTs and “auditor’s local evaluation” for trusts. But Mr O’Higgins told HSJ he did not know whether there would be a further evaluation of organisations for the financial year 2010-11.

A senior source close to the DH said abolition of the commission raised questions about how NHS chief executive Sir David Nicholson - who has said he will take tighter control of finances in the transition to the new system - will ensure consistency in financial arrangements across the NHS.

University Hospitals of North Staffordshire Trust finance director Chris Calkin, also a spokesman for the Healthcare Financial Management Association, said the uncertainty created by the surprise announcement was unhelpful.