Public Services Management: Who guards the guardians?: Paul Gosling talks to Andrew Foster, the new controller of the Audit Commission

ANDREW FOSTER has been the controller of the Audit Commission for four months, and is already bringing his style to bear on its operations. He is putting the emphasis on quality as well as value for money, on consultation with public bodies being reviewed, and is perceived as independent from government.

The Audit Commission's role expanded two years ago to cover the health service and a new strategy document for the Commission, Adding Value, outlines the medium term direction of the Commission, subject to the responses from local authorities and the health service.

'It is us taking stock, speaking to the directly audited bodies, our clients, to say this is a sense of the way we need to go over the next five years, where do you think we need to go in that period of time,' Mr Foster explains. 'The biggest themes are what should be the balance of our responsibilities between probity, regularity and value for money. Another big theme is to what extent should we be responding to local need, and to what extent should we be calling the stakes nationally.'

Mr Foster is trying to counteract criticism that the Commission has underplayed quality considerations. 'In the early days the Commission was sometimes charged with knowing the price of everything, and the value of not so much - we're saying that quality and price are inter-related. Dealing with quality is in our core purpose.'

In conversation Mr Foster stresses repeatedly the need for the Commission to consult, pointing out that it expected local authorities and the health service to listen to its customers and adjust accordingly, and that the Audit Commission must do likewise. 'We expect to make a number of management changes once the responses (to Adding Value) have all come in,' he says.

The Commission must also be willing to criticise government where due, Mr Foster believes. 'We've brought out a major report on housing benefit and we were very critical of a third of councils - we found one place where sacks of post weren't opened for a year. But at the same time there are 64 steps needed to get housing benefit, and this is monstrous, ridiculous.' Similarly, the recent report on education for 16- to 19-year-olds, and the awaited report on standard spending assessments, are strongly critical of government.

He dismisses criticisms that the Audit Commission is unaccountable. 'We're audited ourselves by the National Audit Office; we're in the process of looking at whether our own internal audit should be done by a private firm; and we have a whole wide range of consultative mechanisms. We should open ourselves up to to all the scrutinies that we expect of others.'

A number of important reports are scheduled for publication by the Commission this year, including one on the effectiveness of the CID, which is expected to be highly contentious. Others look at communication between the health service and its patients; purchasing in the health service; and prescribing by GPs.

The Commission must also, Mr Foster says, produce at least one report a year which gives rise to significant savings. This was the object ofa recent report on waste effluent and water supply in the health service. 'It is what we call a nice little earner, showing that if only hospitals managed their water supplies effectively, pounds 15m could be saved. We reckon every year we need to do a small number of studies that just earn the rent of this building and pay for us. The rest is a contribution to the national debate and to what happens at a local level.'

The Audit Commission is also preparing two reports on fraud in local government and the health service. 'That was my response to the public concern about Wessex in the health service, about West Midlands (health service), and about Lambeth. Frankly our belief is that the public service in this country is pretty honest, but we are determined to do an absolutely ruthlessly independent analysis of what is going on.' Mr Foster points out that for each of the 10 years of the Commission's existence it produced public interest reports expressing concern about Lambeth's accounts.

Mr Foster recognises that more devolved management and contracting out may extend the scope for corruption, and one factor considered will be whether the award of contracts should be reviewed by an external assessor. District audits review the finances of 70 per cent of local authorities (the other 30 per cent are conducted by large accountancy firms), and they may find their relationship with their employer, the Commission, changed.

'We may look to put them at an even longer arms length from us. The whole move in the public sector is towards a purchaser/provider split, and I suspect we will develop even more of a contractual relationship with them. We're prepared to do some market testing. What we will be after is quality and a good price.' However, the bulk of the district audit service will remain in place, not least as it brings down the price of private sector competition.

Mr Foster speaks positively of the contract culture in the public services, as 'releasing the creativity of public service workers' and providing 'a better level of specification than we ever had before'. He also recognises the problems it raises. 'What is the end game? Do we know where it is going? Is the market means or end? Who's going to manage it, who's going to regulate it? I think there are a second or third order of questions that we haven't thought through properly yet.'

(Photograph omitted)