The Fabian Society pamphlet ‘Prizing the Public Pound’ by John Tizard and David Walker sets out ideas on how a future Labour government could reform audit and financial management in the public sector.

‘Prizing the Public Pound’ makes the case for strengthening audit and financial management in the public sector as a prerequisite for trust in public finances and ICAEW welcomes the contribution it makes to the debate.

They comment in their introduction, “Effective spending should be economical and efficient and should secure policy goals, using the minimum amount to achieve the biggest result. Spending should be environmentally sustainable. Auditors should also ask searching questions about who benefits, whose needs are served and whether spending makes us more or less equal. The pursuit of social justice and rigorous accounting for social spending go hand in hand.”

ICAEW has issued a response to the pamphlet with ICAEW Director of Public Sector Alison Ring commenting: “We are pleased to work together with the Fabian Society to debate ideas on how financial management and governance within the public sector might be improved. This is as part of ICAEW’s engagement across the political spectrum on the long-term sustainability of public finances and the compact between government and citizens.”

The pamphlet has two principal proposals, based on the authors’ diagnoses of the challenges facing public bodies in the UK: an over centralised state accompanied by a weak centre that struggles to deliver on public priorities, and a ‘patchwork’ of audit bodies.

Their first major proposal combines the ideas of internal audit and budget management to create a new Office for Spending Effectiveness (OSE) that combines pre-spending assessment of departmental plans with an active role in embedding NAO findings and other recommendations taking the lead on ensuring improvements are made, including following up on NAO findings.

Their second major proposal is focused on how audit can be used to improve the effectiveness of local public spending, introducing the concept of ‘place-based’ audit to identify improvements across local public bodies and services within a particular region or local area. This would involve bringing together the audits of councils, combined authorities, NHS trusts, academies, multi-academy trusts, police, and fire services in order to take a more holistic approach of how public spending is delivering outcomes, led by a new Place Audit Office (PAO).

ICAEW’s response addresses these and other proposals put forward in the Fabian Society pamphlet.