The Audit Commission has announced who will run the regional contracts to audit the figures of local public bodies

This article is more than 8 years old

This article is more than 8 years old

The Audit Commission has announced the provisional winners of its 10 outsourced regional contracts, promising savings of 'up to 40%' for public bodies.

The proposed employee-owned spinout from the Audit Commission, DA Partnership, managed to win only one contract and will now launch as a wholly-owned subsidiary of Mazars. It will take on the north east and north Yorkshire contract as Mazars DA.

Two of the 'big four' auditors, PwC and Deloitte, have missed out on contracts, while the other two, Ernst & Young and KPMG, will share half of the 10 regional contracts.

The big winner appears to be Grant Thornton, which has taken a maximum four contracts with a total estimated value of £41.3m.

The Audit Commission will retain a small stable of staff to oversee the contracts, but most of its former staff will transfer to the contract winners. Grant Thornton has said it will take on about 300 former staff from the Commission.

The transfer of staff to the private sector has been controversial, with 500 staff taking industrial action, including an overtime ban, in the past month, in protest about the government's failure to protect their pensions as part of the transfer deal. Following an improved offer from the Commission last week, members of the Prospect union agreed to end their action, with the union describing the result as a "reasonable compromise".

The Commission's chief executive, Eugene Sullivan said the awarding of the contracts to the private sector was a "pivotal point" in the history of public service. "We will be losing a distinctive, and publicly-owned, local public audit service and its district auditors who have helped to protect the public purse effectively for over a hundred and fifty years," he said.

Gareth Davies, the former head of the Audit Commission's practice who led the bid from the DA partnership, said it had not achieved the "dream of a mutual audit practice". Davies will join Mazars as head of public services to lead the new venture, along with a team of former Audit Commission advisors led by Mark Fletcher.

Proposed contract awards:

• Grant Thornton (UK) LLP, a total notional of £41.3m a year covering four contract areas in the North West, West Midlands, London (South) Surrey & Kent, and South West

• KPMG LLP a total notional value of £23.1m a year covering three contract areas in Humberside & Yorkshire, East Midlands, and London (North)

• Ernst & Young LLP a total notional value of £20m a year covering two contract areas in Eastern and South East

• DA Partnership Ltd a total notional value of £5m a year covering one contract area in the North East & North Yorkshire.