The approach of the Secretary of State for Communities and Local Government towards the Audit Commission was ‘blunt and inappropriate’, Prospect has told MPs.

Giving evidence to a select committee hearing into the audit and inspection of local authorities, Dai Hudd, Prospect deputy general secretary, described the closure decision as a ‘shock’.

Asked the reasons for the decision, Hudd said members had only been able to speculate, as initially the only details available were the contents of the press release announcing the closure. He added that it was some time before the union was able to meet and discuss the closure with the Secretary of State.

Prospect branch chair Chris Round reiterated the astonishment felt by staff, adding that while financial savings were given as a reason, it seemed little thought had been given to the consequences of closure, not least the overall cost, which he put at nearer £10m.

In response to a question from Mark Pawsey MP over what the major loss would be if the body is abolished, Hudd said that without the Audit Commission the principle of localism may become weaker. Round highlighted how 'armchair auditors' could not take the place of an audited inspection regime.

Individual bodies would find it difficult to estimate how much audit they needed to go through without the background support from a commission. Public sector auditing was fundamentally different from auditing in the private sector, said Round.

An auditor appointed on a contract basis would not be willing to challenge an authority on the same basis as the Audit Commission, he explained, warning that local authority appointed auditors would lack independence.

Hudd said there was little evidence that costs would be driven down by private sector involvement, while Round described how the commission had acted as a regulator of prices over the years.

Describing the approach of the secretary of state as 'blunt and inappropriate’, Hudd said that the body could be reformed along the lines of the Big Society idea.

But, he stressed, the opinion of staff on the prospect of a mutual could not yet be judged as there was no template to present to them.

In response to a suggestion from Simon Danczuk MP that the union could be more proactive in understanding what a mutual might look like, Hudd said a solid basis was needed before a constructive discussion could be held.

However, he said, a number of models were being looked at, and other mutuals did not have the probity and accountability of the reformed Audit Commission.

Decisions needed to be made urgently, Round said, as currently staff did not know where they stood.

A full transcript will be posted here when available. For further coverage see Public Finance's website.