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Austerity, Audit, and Accountability : New Public Management and the Privatisation of Local Audit in England

Margaret Greenwood
p. 159-177


This paper examines the experience of the local audit reforms in England against the doctrines and principles of New Public Management (NPM). NPM is a term applied to public sector reforms which aim to enhance both performance and accountability by adopting governance and accountability mechanisms from the private sector. The local public audit reforms, which were initiated in England in 2010, abolished the independent specialist Audit Commission, effectively privatising the financial audit function and severely curtailing the extent to which local public bodies are subject to performance audit. As with other state audit bodies, the Audit Commission had acted as both regulator and provider of audit services to local bodies, such as local authorities and local health service organisations. A review of evidence to date shows that short term efficiency gains were made in financial audit and that there is prima facie evidence of greater accountability to local people. However these gains have been made at the cost of : first, a severe reduction in performance audit, a key function of public audit in delivering both democratic and managerial accountability, and second, a longer-term risk to audit quality and thus to the risk of financial mis-statements. In summary, the evidence suggests that the principles of NPM were appropriated to legitimise the reforms, after the decision to abolish the Audit Commission was taken. In contrast, the rhetoric prior to abolition suggests that the reforms were, instead, inspired more by a personal and political agenda than one of rational economic decision making.

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Ce document sera publié en ligne en texte intégral en juin 2018.


The Distinctiveness of Local Public Audit and its Development
The Audit Commission and the Language of Public Choice Theory
The Reforms and the Discourse of New Public Management (NPM)
An Evaluation of Performance and Accountability
Theoretical context
Independence and market concentration
Discussion and Conclusion

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In August 2010, following the financial crisis of 2007-2008 and in a context of widespread cuts in public spending, particularly that of local authorities, the Secretary of State for Communities and Local Government, in a surprise move directly in opposition to a growing culture of audit in society, announced the abolition of the Audit Commission. This has been the independent body and ‘protector of the public purse’ responsible for the audit of English local authorities and local National Health Service organisations.

The Audit Commission has lost its way. Rather than being a watchdog that champions taxpayers’ interests, it has become the creature of the Whitehall state. We need to redress this balance.

By 2015, at a time when there were increasing questions about the need for additional regulation of the private sector audit market, the Audit Commission had been abolished, financial audit essentially privatised, and performance audit, a distinctive and increasingly im...

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Référence papier

Margaret Greenwood, « Austerity, Audit, and Accountability : New Public Management and the Privatisation of Local Audit in England », Observatoire de la société britannique, 19 | 2017, 159-177.

Référence électronique

Margaret Greenwood, « Austerity, Audit, and Accountability : New Public Management and the Privatisation of Local Audit in England », Observatoire de la société britannique [En ligne], 19 | 2017, mis en ligne le 01 juin 2018, consulté le 23 mars 2018. URL : ; DOI : 10.4000/osb.1925

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Margaret Greenwood

Associate professor à la School of Management, Université de Bath

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Observatoire de la société britannique

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