A political row erupted recently over the appointment of Sir Michael Lyons as acting head of the Audit Commission, the public spending watchdog.
The Conservatives accused Sir Michael -- who has been commissioned by the government to carry out an inquiry into local government finance -- of a potential conflict of interest after learning that he was to stand in for James Strachan at the helm of the commission. Local government is one area monitored by the watchdog, which ensures taxpayers' money is spent effectively.
Caroline Spelman, who shadows, the deputy prime minister's office for the Tories, said: "I am concerned that a potential conflict of interest may arise with the appointment of Sir Michael Lyons as acting chairman, notably because of the impact it will have on his review into local government finance, which is a long time coming, but also between his roles in leading a government-appointed review on one hand and chairing the independent Audit Commission on the other."
Mr Strachan had been reappointed by the government in November, but decided this month to quit in order to focus on what John Prescott, deputy prime minister, said was "an expanded portfolio of private and voluntary sector activities".
Mr Prescott said Mr Strachan would continue to chair the commission until the end of January. Sir Michael would then take over until a permanent replacement is found.
The Tories have opposed the bureaucracy of the commission's inspection regimes, which they say costs taxpayers £1.0bn a year, and argue that Mr Strachan's departure could provide an opportunity to overhaul the system.
Gordon Brown, the chancellor announced in this year's Budget that there would be a "long-term rationalisation" of public services inspectorates, merging 11 bodies into four. The functions currently carried out by the commission and the Benefit Fraud Inspectorate are to be merged.
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