Audit Commission to be scrapped
The official watchdog responsible for ensuring local councils deliver value for money is to be scrapped.
Communities and Local Government Secretary Eric Pickles said the Audit Commission had "lost its way" and would be disbanded.
The commission's inspection duties will now pass to the National Audit Office - the Whitehall spending watchdog - while its in-house audit practice will be transferred to the private sector.
"The corporate centre of 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," Mr Pickles said.
"We need to redress this balance. Audit should remain to ensure taxpayers' money is properly spent, but this can be done in a competitive environment, drawing on professional audit expertise across the country. I want to see the commission's auditing function become independent of Government, competing for future audit business from the public and private sector.
"These proposed changes go hand in hand with plans to create an army of armchair auditors - local people able to hold local bodies to account for the way their tax pounds are spent and what that money is delivering."
The decision was condemned by shadow communities secretary John Denham who said the commission needed "reform not abolition".
"Without the function of the Audit Commission there will be no one to step in when a council is failing, as Doncaster was recently. This move by the Government shows they are only interested in cost of everything, the value of nothing."
Commission chairman Michael O'Higgins said that it had already been considering moving its audit functions into the private sector and had opened discussions with a number of major audit firms. However he rejected Mr Pickles's criticisms of the organisation.
"The national fraud initiative that we have run saved £200 million in its latest run - it has saved £600 million overall," he told the BBC Radio 4 PM programme. "The quality of local government has improved radically in the last 10 years under the performance regime that we have run."