Housing, Communities and Local Government Committee
Oral evidence: Pre-appointment hearing: The Chair of the Local Audit Office, HC 47
Tuesday 16 June 2026
Ordered by the House of Commons to be published on 16 June 2026.
Members present: Florence Eshalomi (Chair); Lewis Cocking; Andrew Cooper; Mr Will Forster; Mr Gagan Mohindra; Sarah Smith.
Questions 1 - 40
Witness
I: Bill Butler, the Government’s preferred candidate for Chair of the Local Audit Office.
Written evidence from witnesses:
Witness: Bill Butler.
Chair: Good morning, everybody, and welcome to the Housing, Communities and Local Government Committee. My name is Florence Eshalomi, and I am the Chair of the Select Committee. Could I ask Committee members to introduce themselves, please?
Andrew Cooper: I am Andrew Cooper, Member of Parliament for Mid Cheshire.
Sarah Smith: I am Sarah Smith, Member of Parliament for Hyndburn.
Lewis Cocking: I am Lewis Cocking, the Member of Parliament for Broxbourne.
Mr Mohindra: I am Gagan Mohindra, Conservative Member of Parliament for South West Hertfordshire.
Q1 Chair: This morning our Committee will be interviewing the Government’s preferred candidate for the chair of the Local Audit Office. Could I ask our candidate to introduce himself, please?
Bill Butler: Good morning, everybody. I am Bill Butler. I am very pleased to be the preferred candidate to chair the new Local Audit Office.
Chair: Local audit is always in the news with Government finances, so hopefully this session will be an informative and important one. I will hand over to my colleague Gagan to start with the questions.
Q2 Mr Mohindra: Good morning, Mr Butler. How would you describe the state of the local audit system now, and what role will the Local Audit Office have to improve it?
Bill Butler: Two years ago I would have described it as in intensive care; I think now, to pursue that analogy, it is in the high-dependency ward. There are signs of recovery, and the position has stabilised on the back of the statutory deadlines, which have cleared the backlog. However, there are still very significant issues in terms of disclaimed audits. At the heart of these reforms is the intent to give cohesion to the system, because a key issue has previously been that there are six organisations, all honestly doing their best but not coming together.
The opportunity for the Local Audit Office is to pull things together so that there is cohesion between appointments, quality control reviews, and the work with authorities—who, after all, are the key part of this. It should also work on the code and standards for audit in a cohesive way. When I appeared before the Bill Committee, I said that I could not envisage a solution to the current problems in local audit without the Local Audit Office. However, it is also important to know that there is no solution with just the Local Audit Office. It requires a different approach in many local authorities, which are also coping with their shortage of resources and, in many cases, with local government reform. It also needs input from the accountancy bodies professionally. A key part of my role, and the Local Audit Office’s role, will be to provide that cohesion and leadership. However, this is a partnership solution, and it remains a partnership solution.
Q3 Mr Mohindra: If we were to fast-forward five years, what would we see different?
Bill Butler: I always hate those questions.
Mr Mohindra: We will make a note.
Bill Butler: Yes, you’ll make a note and doubtless you will get me back in five years.
I do not think that in five years we would have resolved everything. My experience is that even if you think you have, something turns up to make sure that you have not. I expect that within five years we will have recovered the audit position so that we ought to be getting opinions—and mostly clean opinions—on most local body accounts. I hope that there will be a cohesive system, and I hope that we can have encouraged the market. The market is very tight at the moment. In my current role at PSAA, my staff spent a huge amount of time making sure that people stay in the market and encouraging firms, which means that we are not rolling over, but we are on the back foot. I hope that the LAO can bring in additional supply. I think that in five years’ time, local audit will not be an issue that concerns anybody, but just something that happens and which we can rely on.
Q4 Mr Mohindra: Looking at the current state of play, 9% of local audits were not certified by this year’s backstop date. You just spoke about trying to build capacity in the system. What will you be doing to encourage that?
Bill Butler: Part of it will be to rebuild confidence in the audit regime. One thing I think has happened as a result of the current situation, the disclaimers and the backlog is that, whereas for many years public audit was regarded as a relatively low-risk area in the accounting firms, now you could not say that that is the case. That means that issues are being escalated to risk partners nationally and internationally. The volume of disclaimers is unparalleled internationally, which means that firms are far more prudent. In a world where audit is generally far more risk averse, because of things that have gone on in the private sector, the role of the LAO is to stabilise it and create a code. Part of my role, and that of the staff of the LAO, will be to work with firms to try to encourage them to build their capacity. That is not something that has happened in the last five or six years.
Q5 Mr Mohindra: You mention the disclaimers. At the moment, 45% of audits have disclaimers. Do you think that figure will be the same in the future?
Bill Butler: I sincerely hope not. A disclaimer opinion is better than no opinion at all.
Mr Mohindra: Marginally.
Bill Butler: Yes, marginally—we could argue for a long time about how marginal that is. We are working towards it, and the number of disclaimers is going down. However, in a significant number of authorities there are disclaimers for three or more years. My view, and the view of audit partners to whom I have spoken, is that it is very difficult to envisage how those will be closed out without some specific intervention. It is important that we understand that because a lot of those authorities will be involved in local government reorganisation and there is a risk that they taint the new authority. The new authorities will have enough going on without that.
At the moment the Department, in conjunction with PSAA, is surveying the firms to improve the data on exactly what is going on. Although there are some common themes in the disclaimers, each authority is different and each auditor brings a slightly different professional judgment to it. The current position cannot carry on, not least because it taints the Whole of Government Accounts. I do not want to spend too much time in front of Select Committees, and I will try to avoid PAC if I am appointed to this post. A key part of doing that will be working with people.
In the end, however, it is a matter of the opinion of the auditor on the ground. The LAO will have a lot of influence on the environment in which people work, but auditors will need to make the decision on whether or not accounts are disclaimed.
Q6 Mr Mohindra: You mentioned local government reform. I am from Hertfordshire, where we potentially have LGR. In your professional opinion, does LGR cause you concern, given the potential disruption?
Bill Butler: I am going to shy away from that because it is a broader policy issue that is outwith my control. My responsibility will be to make sure—back to the disclaimers—that we do not cause more problems from an audit point of view, and that we make sure that local government bodies produce proper accounts. At the heart of this is public money—taxpayers’ money—that is not being accounted for, and for which stewardship is not being demonstrated in the way that you would want. We will do everything we can to make sure we do not add to the problems, but you will forgive me for shying away from the rather broader policy question.
Q7 Chair: Coming back to the disclaimed opinions and the accounts, if central Government had disclaimed opinions, that would come before the Public Accounts Committee, because that is quite serious. Do you feel that there needs to be more probing into local government accounts? We have a situation where more and more council tax payers are quite worried about how their councils are spending money, yet the auditing seems to go unchecked and unbalanced.
Bill Butler: I think it would be wrong to think of the disclaimer opinion as meaning that nothing is going on. Authorities are still, on the whole, publishing their accounts; it is the audit that is not taking place. The uncertainties in a number of areas are technical and have marginal impact, but undermine, as you quite rightly point out, the confidence of anybody who is looking at local government, both whether they are a local constituent or whether they are an international banker looking at the state of play in local government finance. Resolving it is important. My recollection is that this Committee’s predecessor did a review of local government finance and touched on audit, and a number of recommendations that were made then I think have been picked up in the legislation and policy that pertains to the LAO.
Q8 Andrew Cooper: Thank you for coming today, Mr Butler. What motivated you to apply for this role? What specific experience do you bring to it?
Bill Butler: I think my counsellor is still asking me exactly that question! I started in local government audit and then I escaped in 2002 and pursued, as you have seen in my CV, a different course. There are three reasons why I am suited to it. Professionally, I understand what is going on. I have worked as a public sector auditor and in public sector audit for a long time; I have worked at audit partner level; I have been the finance director in public bodies; and I have sat on and chaired audit committees in public bodies, so I have that professional background.
I have a practical background in what this organisation faces. A key part of that is that there is no organisation at the moment, and a key part of my role will be to create, with my staff, a new organisation, new cultures and a new approach. I have been through that loop both with what was the Healthcare Commission and is now CQC, and with the Gambling Commission, where I was director of corporate services and we put the cables in under the floors for our IT systems. I have that practical experience of what is involved and how difficult it is to establish a new organisation, let alone all the audit issues.
Finally, on a personal basis, which I think pertains to the first part of your question, I fundamentally believe that accounting for public money is different from, and if anything more important than, accounting for money to your shareholders. This is money raised by compulsory levy, which is why the audit goes beyond just the accounts and includes the value for money, propriety and the auditor’s special responsibilities—I believe in that. I think I am suited because I am not part of that world, or have not been other my last couple of years at PSAA. I am not part of an audit firm or part of local government. I will try to phrase this in a positive way: I know what I am letting myself in for on a reasonable basis. I see everything through the PSAA eyes at the moment, but I am not naïve about what this job will require, and I hope that, with the help of the new organisation and the support of all the stakeholders, we can make a difference.
Q9 Andrew Cooper: You were at the Audit Commission earlier in your career as a director and district auditor.
Bill Butler: I was. I did everything from trainee. I started on the audit of what was then the Greater London Council, so yes.
Q10 Andrew Cooper: How will your experience at the Audit Commission inform how you set the priorities at the Local Audit Office—if it will at all?
Bill Butler: There is that Jesuitical thing about, “Give me the boy, I’ll give you the man”. I think it is difficult to escape from the fact that that is how I learned, and what I have just described about my beliefs are obviously shaped by that, but it is a long time since I was in the Audit Commission, and the Audit Commission I was in was a very different beast from the one that was finally abolished, in terms of performance and so on.
There are things around the ethos of the importance of audit and the responsibility that you owe to the public and taxpayers, but I am more informed, from my work in setting up new organisations, about how important it is to bring in some good stuff, but also to talk and learn. Everywhere I have been, I have learned things that I did not know previously. I will bring some experience from the Audit Commission as an auditor, but I think it is fair to say that nobody in their right mind would allow me to audit anything anymore. It is clear policy that this is not about recreating the Audit Commission; the Audit Commission has been gone for well over 10 years. My job is to create a new organisation that delivers what the Act said and to improve a situation that I find professionally embarrassing and intolerable.
Q11 Sarah Smith: You mentioned a really important word there: culture. I am interested in what sort of culture you want to establish in this new organisation and how you will go about that.
Bill Butler: This is always quite a difficult one, because I do not want to establish a culture; I want to work with my staff to establish a culture. I have been in organisations where I was told what the culture was, and it quite often does not match. I would want to develop that work with staff in doing that. It is the best way of doing it. I believe that culture grows up through the organisation. I can’t imagine it will exclude words like “independence”, “professionalism”, “adaptability” and “integrity”; those are things I want. I want it to feel like an equal and engaging organisation. I can sit and give you a list of buzzwords, but this is really about growing the organisation and letting the organisation flourish and create its culture.
Q12 Sarah Smith: I might push you a little on that. Given where it will sit and the objectives of the organisation as the leader coming into it, what do you think will determine its success, and what early steps might you take to make sure you start off on the right track?
Bill Butler: I think that is really important. You only get one chance at starting. We need to build an organisation that is credible. Local government audit isn’t at the moment, so we need to build a credible organisation. It is important that we get some really good people in to do this. It needs to attract the best people available, and that includes people who do not even know that this exists at the moment. I have been trying to shake the tree on the non-executive appointments. Getting some good people, making sure the organisation is credible and making sure there is a supportive environment is not going to be easy. I know from PSAA that my staff already feel exposed in terms of what they are trying to achieve and the strains that that puts on them. It will not be easy to get an organisation off the ground.
Part of what I want—I am not sure whether it counts as culture—is a supportive and nurturing environment so that people feel free. As I said, the one thing I have learned consistently over my career—I hope I have got better at it over the years—is that you need to learn. I know that I am going to have to learn a lot or find people who can help me. My building block is the people. I suspect they are out there.
Q13 Sarah Smith: What do you think strategic leadership needs to look like right now in local audit?
Bill Butler: Somebody on top of a hill with a big flag saying, “Come and help us out.” The steps that the Government have taken to stabilise the position, which were being discussed prior to the general election, have helped. If I go back to my earlier metaphor that this is still in the high-dependency care ward, the leadership needs to give people the confidence that things can be made better. I have found that people often like that sort of challenge. In the past, I thought that going in and doing something challenging was, first, more rewarding than going and keeping something ticking over; and secondly, if you are keeping something ticking over, you can only go down. This is a real opportunity to make things go up.
Q14 Sarah Smith: You touched a little on this. Comparisons between this and the previous Audit Commission are probably inevitable. What lessons have been learned from what happened in the past that you will use to improve this new organisation and this new approach?
Bill Butler: At the heart of it, this organisation needs to be about understanding and overseeing the effective audit of public bodies. That includes standard accounting arrangements, the value for money stuff and the special responsibilities of public auditors. We have to get that right. I am old enough to have been around before the Audit Commission, and was there when it started. My recollection is that the Audit Commission built over a reasonable period of time.
Back to the earlier question about five years, that is quite a short period of time, but everything is built around competence and an understanding of the accounts regime, in a world where local authorities are actually comfortable with their accounting and their audit. That is the first step. I do not know whether that is a learned experience from the Audit Commission or whether that is just blindingly obvious. If we do not get that right, nothing else counts. I enjoyed my time at the Audit Commission—don’t get me wrong—but as I said earlier, it is the best part of 25 years ago.
Q15 Chair: Mr Butler, you mentioned that you have had a long career in auditing and local audit. Obviously there have been a number of changes over the years across local government. Recent local elections have returned representatives of many different political parties. I think it is fair to say that the two-party system of two main parties is changing, and there is a lot more awareness of local government and local government finance. In terms of that political awareness and bringing stakeholders along with you, if you are successful in this role, how will you demonstrate that you are working with a range of different councils and councillors, and with a more interested and knowledgeable public who are, in many areas, in terms of the cost of living and prices, looking more closely at council finances and where their council tax is going?
Bill Butler: I think your analysis is absolutely right. It is difficult because there are 457 authorities at the moment. There will be a different number after LGR, one assumes, and you cannot get round all of them, but I have quite a lot of experience of getting stakeholders on board. One of my favourite groups of people I had to work with was small bookmakers. When we were setting up the Gambling Commission, I had to persuade them that they should pay a fee to be licensed. They were also the best accountants that I have ever encountered. Many of them did not have any formal qualification in maths or arithmetic, but they were very good.
I enjoy that part of the work. I enjoy going out and talking to people. Obviously, until my appointment is confirmed or otherwise, I cannot do very much, but I will want to get out and talk to some of the representative bodies. Because of where the PSAA sits, I obviously have the benefit of being in the Local Government Association; I know some of the people there.
You know what this is like, because it is part of your role as well: you have to get out and talk to people. That balance, and the political environment, really means that operating independently is important. It is fundamental. Part of the credibility thing that I talked about is that people do not doubt that the LAO is exercising independence, and more importantly, that auditors on the ground are free to exercise their independence of judgment. I will spend most of this summer, I hope, going around and talking to people and building networks. I will not be all over social media.
Q16 Lewis Cocking: To expand on that, we are talking about councillors specifically. The Government have brought forward legislation to ensure that if you sit on a planning committee now, you have to undergo planning training. In your professional opinion—this is not to diminish any local councillor at all; scrutinising and asking questions of auditors and scrutinising accounts is a specific skillset that some people do not have—if someone is sitting on an audit committee do you think that, in order for them to be able to fulfil that function more strategically and more robustly, there should be a requirement for some type of training before they undertake that role, as a local councillor?
Bill Butler: I think it is wise, however you enforce it. That training is available, of course. The LGA and CIPFA run that training.
Q17 Lewis Cocking: But should it be mandatory?
Bill Butler: I wouldn’t object if it were. You are quite right that there is a broader implication, particularly for new councillors, in terms of acquiring an understanding of a highly technical area. My experience from having sat on audit committees at the Law Society and the PSAA—we are member organisations with elected members—is that we spend quite a lot of time helping people to understand. The worst possible scenario is that people are overwhelmed by the numbers that they are confronted with and nod at things without asking important questions. My view is that most councillors should have questions that they can ask their auditors, because it is about the fundamentals of how their organisations work. I would not object to it, but mandating things is probably beyond my brief.
Q18 Mr Mohindra: Thank you for your answers so far. If you were not successful in getting this job, what would you do?
Bill Butler: I would cry in a corner for a little while. I am busy anyway. I would make sure the PSAA hands over in good order. We are in pretty good order at the moment. We have managed to negotiate the extension of contracts with the audit firms so that there is audit coverage through to 2030. The new organisation will not be dipping around in that. I would finish my term at Propertymark, where we are doing some really important work in supporting better regulation of property agents, and then I would retire to the country. But—for the avoidance of any doubt—I would rather do this first.
Q19 Chair: If you are successful, obviously one of your new roles would be appointing the controller of local audit. My understanding is that the Government would want that person in place later this summer if you are successful in this role. What sort of candidates would you want to see in that role, and how would you approach the recruitment process?
Bill Butler: The recruitment process for the first controller is out of my hands. I am involved in it and will have a say in it, but it is effectively run through a ministerial process. I think the candidate needs to understand how to grow a new organisation, including in terms of the physical infrastructure. They need to understand the importance of building an organisation from scratch, because that will take up most of my term. But they will also need to understand the world in which they are working. Does that mean that it should be an accountant? They might be, but I don’t necessarily think they need to be. There have been successful chief executives of organisations who are not from those industries. The chief executive of the Gambling Commission, when it was formed, was not the owner of a casino or a betting shop.
The short answer, Chair, is that I want somebody really good who is as committed as me and those I work with to sorting out the situation in public audit. As I said earlier, it could quite possibly be somebody who does not even know this exists at the moment. Part of my ambition is to make as many people aware of it as possible so that, when we sit down to interview, we say at the end of the day, “We really have a difficult decision about who to choose.”
Q20 Andrew Cooper: In the recruitment process for your role, 79% of the applicants were men and 80% of those interviewed were men. What steps would you take to make sure that when the Government are recruiting—or when you are recruiting—the controller of local audit, you end up with more of a gender balance in appointable people?
Bill Butler: I think is beyond gender balance. It is more measured and balanced. It is really important that the non-executive board, in particular, is credible to the world in which we are working. There are things that you can do. In the recruitment process, I know that a lot of effort was made to encourage people from under-represented groups to apply. I would want to do that. I have certainly been relatively successful in doing that in other organisations and using search. It is not always easy because part of the problem in my experience is not just the recruitment process but finding people who do not know that this job exists and encouraging them in the belief that they could do it.
I have had long conversations with three presidents of the Law Society. There were three women from global majority backgrounds who in succession, unusually, became president of the Law Society. The reason they were there was a lot further back down the chain than the appointment process. It was about how you encourage people. Part of the answer to that question is that if you cannot get it right immediately, make sure you are growing it in the organisation. That goes back to the inclusivity of the organisation and who you have working for it. I will do my best to make sure that there is proper representation of all groups, particularly under-represented groups, in who is up for consideration. It may surprise everybody to know that working in a room full of old men is a very unrewarding experience. The mixtures that I have had on the boards I have worked with make the boards better.
Q21 Chair: I am not sure what the recruitment process will entail, but would you be open to working with specialist recruitment companies that are tasked with finding these very candidates?
Bill Butler: I wouldn’t work with anybody else. I want people who are out there working their connections as we get into the broader recruitment. The LAO is leading on that and we are beyond the ministerial appointments. I know that Ministers are working really hard on this—don’t get me wrong—but I am shaking the tree. If members of this Committee know people who ought to be thinking like this, please shake your trees as well.
Q22 Andrew Cooper: In one of your earlier answers, you touched on the independence of the Local Audit Office. You are appointed by Ministers and required to consult with Ministers over the appointment of the controller of local audit. How will you ensure your personal independence and the institutional independence of the Local Audit Office, so that it is free from any kind of Government or ministerial interference?
Bill Butler: I would start by saying that I had the opportunity to listen to the Minister when she spoke to the Committee last week, and I think she made it very clear that she was not going to get involved in the details. That is the starting point. This organisation will be as independent as the FRC and a number of others. As the Audit Commission was, it is in theory subject to direction, but only after consultation. The framework for control is standard. I think there is a state of mind. If it has not come across, let me emphasise this morning that I have quite an independent state of mind. I have spent most of my career doing that. At the SIA, I was in exactly the same position with ministerial oversight.
Andrew Cooper: The Security Industry Authority.
Bill Butler: Yes, I beg your pardon. Part of the art of that is understanding where independence is important. It is not about what your website address is; it is about the important things. The other element of the independence is the umbrella that the LAO puts over auditors to ensure that there is no interference, as I have said on a number of occasions. In the end, it is the auditor locally who is making the decision. What is important is making sure that that remains untainted.
No world is ideal, but this is a standard framework for an independent arm’s length organisation. I have worked in it before. That means that I have encountered areas where I am not happy with where officials and Ministers might want to go. I have always managed to work that through without an absolute falling out.
Q23 Andrew Cooper: There may well be occasions when the Government of the day disagree with your position or the position of the Local Audit Office on matters relating to local audit. How will you navigate that?
Bill Butler: What I have always been able to do so far, in other roles, where it has been quite intense on occasions, is to go and talk to people, to negotiate—to be clear about what the aspect of independence is, and what it is that I am trying to protect. Is this fundamental, or is this instrumental? In the end, I have always been able to resolve those negotiations.
The longstop on it is that Ministers could consult and then issue a direction. I hope that I never reach a point where I would be forced to stand on my dignity, but I would if I had to. I doubt that that will happen. Quite often, I have found that, where there appears to be a conflict, it is a conflict of understanding a role, rather than something fundamental.
Q24 Mr Forster: Good morning, Mr Butler. How will you manage the relationships from the Local Audit Office to the National Audit Office to the Financial Reporting Council, and other organisations, so that you can work as effectively together as possible?
Bill Butler: All those relationships are fundamental and a lot easier to manage, really, than the 457 local authorities we talked about.
I have a personal relationship with some of those people from past connections and my current roles. All of them have an independent role to perform, but I need to be aware of where the Comptroller and Auditor General is in terms of the impact on whole-of-Government accounts and the authorities’ audits. Those are important relationships to build.
As far as the FRC is concerned, the new Local Audit Office will have a power to set standards for local government, but they need to be set in a real world where auditors recognise them, so the relationship with the FRC is going to be important. The relationship with the accountancy bodies, with CIPFA and the ICAEW is fundamental, and I have that relationship where I am now.
Yes, I agree with you that they are important, and they are manageable and workable and professional.
Q25 Mr Forster: Would you have regular meetings with them?
Bill Butler: They are all pretty busy people, but yes. At the moment, we meet regularly with CIPFA. I meet regularly with the C&AG—not every week, but perhaps once a quarter, or where there is a particular issue that we need to deal with.
Q26 Lewis Cocking: Mr Butler, you are currently chair of the Public Sector Audit Appointments company. You appoint auditors to carry out audits on local government finances. We have had a number of councils over the relatively short to medium term declare section 114 notices.
Did you take any action? A council has had an audit and has then issued a section 114 notice, because its finances are not in the best state; some of the councils who issued those notices did have relatively good audits.
Did any alarm bells ring at your organisation or did you investigate any of that from a strategic point of view?
Bill Butler: It is not strictly the PSAA’s responsibility to respond to that. It is frustrating, but that is part of why the LAO is welcomed, that, basically, our responsibility is to let contracts and appoint auditors. Our sole sanction would be to remove an auditor if they were not contract-compliant. While we monitor that, the responsibility for the impact of 114s does not sit with the PSAA.
Q27 Lewis Cocking: It is about getting more credibility in the audit system. It is very frustrating if you are the resident of a council and you can look back over the audits and see that it passed the audit, but then was suddenly issuing a section 114 notice. Most councils do not go bankrupt overnight, so within that audit process the auditor is not picking up serious financial risks or stress that that council is under.
I find it a bit concerning. It may not be your responsibility, but you are appointing these people to carry out these audits. As the organisation in charge of that, you must be thinking, “Well, something is going on here. What are we not getting right in the process?” Even if you fed that back to Ministers at strategic level, that would have been useful.
Bill Butler: We do feed back our overall observations.
Q28 Lewis Cocking: Did you feed back any observations?
Bill Butler: We have fed back, but I have to be clear: the responsibility for the quality and content of audits does not lie with the PSAA. It lay for a while with the FRC. Officials have been working on a new arrangement, which is being put in place. That will pick up the quality issues.
Some of the firms have been fined for failings in local government audit. There is a gap. When the C&AG wrote to the Chair of the predecessor of this Committee, one thing that he pointed out was the disappointing gap between the issues in local government audit and the number of public reports made. I do not understand why that is; auditors exercise their local judgment. I will be happy at the LAO to be in a position to take more of a view of that. But at the PSAA, we rely on others to assess the quality of the audit.
Q29 Lewis Cocking: Could you give us a bit of a flavour? Let us say that you are successful and get put in post, and this happens to an authority—they have a couple of good audits and suddenly issue a section 114 notice. What approach would you take?
Bill Butler: There are arrangements independently to look at the quality of the audit being delivered. If I was particularly concerned that an authority had ended up in a situation without any warning bells from the auditor, I would probably want that review to take place—I would be responsible for the overall quality of audits at the LAO in a way that I am frustratingly not at the moment.
It is not that I do not share the frustration; it is marked up, really. The C&AG’s comments, to the previous Chair of this Committee on the back of the last report, about things being quiet—well, in some cases I do not think auditors necessarily consider their public audit responsibilities as I perhaps would have when I was a district auditor.
Q30 Lewis Cocking: Finally, can we be assured that you share some of the concerns that I have outlined and that, under this new organisation, you will be more involved in the process of trying to solve some of those issues, so that councillors and constituents get an earlier flag about the risks and options that they have picked for the council’s finances?
Bill Butler: Yes. I would be very disappointed if not. We do not always get it right—some things occur catastrophically. But we can do more. As I outlined earlier, public audit is not just about the accounts; it is about value for money and specifically about the particular responsibility to report in public. I have done that in the past—albeit the distant past.
Q31 Andrew Cooper: To continue on from Lewis’s question, you are currently chair of Public Sector Audit Appointments Ltd. In your declaration you have said that you will put safeguards in place to manage conflicts of interest between your responsibilities at that organisation and the new organisation, should you be successful. How do you expect those safeguards to work in practice? How would you set them up?
Bill Butler: The Minister has made it a condition of my appointment that those should be in place. I would start by pre-empting issues on obvious areas. I have already recused myself from any consideration of financial transfers, from what happens to the balance of the organisation and from issues pertaining to the transfer of staff.
We have a PSAA board meeting next week where we will formally adopt a code that ensures that in every paper that we take through the board and in every conversation that we have, we consider whether there is a risk of conflict. Those procedures have been shared with the Department, which also needs to be content.
I have appointed one of my non-executive directors as deputy chair, who will take the chair immediately. Although we do not have a senior independent director, because of how this is structured, one of my other NEDs, who has long experience of accountancy regulation, is going to be monitor and to actively police that issue.
Those are the arrangements in place. I am working now in shadow, so I have not gone out of my way to try to work around it in anticipation; I have taken that very seriously. From the moment I applied for this role and was interviewed, I have been extremely cautious not to involve myself in anything where there is an obvious risk of conflict.
The benefit, of course, is that there are a considerable number of areas where there is not a conflict of interest, but a clear shared interest in bringing this together. That is the reason why, in discussions with officials about taking up the preferred candidate position, I think that, on balance, it is better to manage the conflicts than to leave the PSAA at the moment.
Q32 Andrew Cooper: I acknowledge that you are recusing yourself from some staff transfer arrangements, but nevertheless is it your expectation that there will be some continuity of staff at the PSAA and the Local Audit Office, to retain that institutional expertise?
Bill Butler: I fervently hope that they will all come. There is a very small group of people in the National Audit Office who work on the code and 30-odd staff at the PSAA who understand how contracts are managed. If I could lock them in a box and bring them with me, I would do it.
Q33 Andrew Cooper: I am sure they will be reassured to hear that.
Bill Butler: They know; they have heard it on a number of occasions. They are fundamental to the success of the organisation. To have to replace them and their understanding would be a big step backwards.
Q34 Andrew Cooper: Okay. We understand that you are going to be working an initial five days a week at the Local Audit Office, should you be successful. You are continuing as chair of the PSAA, and you have other responsibilities at Propertymark. How are you going to manage your time?
Bill Butler: I will not be doing five days; I will be doing three days. Some weeks, because of busyness, it might be five. I have been doing this portfolio stuff for quite a while now and what I have found is that things are rarely consistently five days a week; if they are, then I am not doing my job properly. I expect it to be very busy in patches where it is probably more than five days a week, but over time, I think I can manage it.
I also have other responsibilities that I need to manage. I believe I can do this. I would not have put myself up for it if I did not. There will be times when I perhaps regret that I put myself up for it, but managing time is fundamental.
Again, it is one of those areas where having the right staff and support around you helps you to manage your diary. As you know, in your role demands need to be managed because otherwise they will very quickly exceed the time available. It is manageable. It will not surprise you that board members at Propertymark are asking me the same questions.
Q35 Chair: Mr Butler, you did not specify how many hours you work as chair of the PSAA.
Bill Butler: It is three to four days a month.
Q36 Chair: A month?
Bill Butler: Yes, and it is similar at Propertymark.
Q37 Chair: And you expect to retain your role as chair when you take up this post, if you are successful?
Bill Butler: At Propertymark, yes. At the PSAA, I expect that there will be a filter across, back to the deputy chair role. I expect that, as we move forward, my focus will be increasingly on the broader environment of the LAO. I think I said at the beginning that I still see the world through PSAA eyes; as that changes, I hope I will be able to step back. We expect PSAA staff to transfer finally in spring next year.
Q38 Chair: So if any conflicts arise, you feel that there will be enough mitigations in place?
Bill Butler: If there are conflicts, I will be stepping out of them, and others will be watching over me to make sure that I do, both within PSAA and within the department and the shadow team.
Q39 Chair: In terms of your broader interests and roles, are there any other professional or voluntary work commitments that you will continue to lead and undertake if you are successful in this role? Do you feel that they could have an impact?
Bill Butler: The only other two things that I am involved in are CIPFA—I am a professional member of CIPFA—and the Prospect trade union, of which I am also a member. I have held my membership since 1978 in the predecessor organisations, although I have never troubled them beyond my annual pay arrangements, and that was some time ago. Those are the only other things that I have any involvement with.
Q40 Chair: Are there any other conflicts of interest or anything else that the Committee should be aware of before our deliberations?
Bill Butler: None that I can think of, Chair.
Chair: Great. If there are no other questions from colleagues, I thank you very much for appearing before the Committee this morning, Mr Butler. We will now move into a private session to deliberate on your candidacy.