On behalf of 1,300 Audit Commission staff, Prospect negotiator Richard Hardy said: “The report supports our members’ evidence to the committee that the maintenance of core audit skills is paramount, and their criticism over the total lack of evidence to back claims that closure would result in savings of £50m.

“The findings also echo Prospect’s fears that unless the government tackles the problem of limited competition in the audit market abolition will be seen as a mechanism for simply handing over public money to private hands.

Hardy said members had noted that the report backed the union’s call for measures to ensure the key skills of staff are not lost and welcomed support for the audit practice functions of the commission to remain, becoming a significant player in the market.

“We support the creation of an Audit Practice Mutual and will continue to press both the Audit Commission and the Department for Communities and Local Government for an outcome that best supports staff.

“But this must be on the basis of best practice and with guaranteed work in the first instance to prevent it from being strangled at birth. Failure to do so will leave local government without a genuine choice in a market that is likely to be dominated by a handful of private auditors.”

Prospect also supports the recommendation for a root and branch review of public audit. “The government seems to have sleep walked into a situation of a complete upheaval of the public audit framework and this needs to be addressed,” he said.