Source · Select Committees · Public Accounts Committee
Recommendation 3
3
The timing and delivery of local government reforms remain unclear.
Conclusion
The timing and delivery of local government reforms remain unclear. The local government audit crisis stems from long-standing issues, including fragmented system ownership, limited audit and finance capacity, rising regulatory demands, overly complex accounts and financial reporting requirements, and the low profitability of local audit work. To address delays and improve transparency, statutory deadlines (“backstop dates”) were legislated for on 9 September 2024, requiring audited local authority accounts to be published by set dates. These deadlines aim to accelerate audit completion, reduce the backlog, and restore confidence in timely financial reporting. However, whilst the backstop is increasing the number of accounts brought to completion, it is also resulting in a higher number of disclaimed opinions, leaving an assurance gap over the data included within these accounts. Further reform followed on 18 December 2024 with the Local Audit Reform Strategy, which includes provisions in the English Devolution and Community Empowerment Bill to establish a Local Audit Office as a unified oversight body. While MHCLG aspires to eliminate qualified or disclaimed accounts by 2027–28, its reliance on vague ambitions without clear milestones makes progress difficult to assess. MHCLG officials have been over-optimistic before about how quickly audit timeliness could be improved. It will be important that the Treasury does not underestimate the impact of local government reorganisation on the Whole of Government Accounts. 4 recommendation a. MHCLG should provide, alongside the Treasury Minute response, a document which sets out: • the actions already taken to address the local audit crisis, including milestones achieved to date, • Key dates and deliverables that remain outstanding, with clear evidence of how these will be met, • Further measures the department intends to implement to ensure resolution, including how it will ensure that auditors build back assurance in a tim
Government Response
Response Pending
HM Government
Response Pending
The government agrees with the Committee’s recommendation. Recommendation implemented MHCLG has written separately to the Committee alongside the Treasury Minute with the information requested. The government does not agree with the Committee’s conclusion in relation to local audit. The government has a clear ambition to clear all backstop-related disclaimed opinions by the end of 2027-28 and has published a transition plan setting out the arrangements for the reformed local audit system to help meet this objective. The government agrees with the Committee’s recommendation. Local Government Reorganisation (LGR) programme on future WGA submissions. The programme is expected to lead to significant structural changes within the local government sector, with consequential effects on WGA data collection processes from WGA 2028-29 onwards once the reorganisation programme is fully in place. The extended implementation period provides the Treasury with sufficient time to ensure that the list of entities required to submit data reflects the restructured local authority landscape. Engagement between the Treasury, MHCLG, and affected local government bodies is ongoing and will continue to identify issues early, support effective preparation, and mitigate risks to future submissions. The Treasury will continue to deliver training and guidance to entities to support high‑quality submissions. As LGR reduces the overall number of submitting bodies, the Treasury will be able to offer a more tailored level of support than is possible under current arrangements. The government expects that the consolidation of multiple bodies into new unitary authorities will result in a substantial reduction in the number of individual WGA submissions required. While consolidation work at the local authority level at the beginning may be more complex, the overall complexity of consolidation at WGA level is therefore expected to decrease over time. The introduction of a new, more streamlined method for submitting financial data across all WGA submissions will further support the sector during this transition by reducing manual inputs and improving the alignment of local authority data with WGA requirements. The government will continue to monitor the impact of LGR on WGA processes and will take further steps as required to maintain the quality, completeness, and reliability of WGA data. billion of capital investment for the NDA to deliver on its priorities, hazard and risk reduction across the estate, consolidate waste at regional stores, and dispose of nuclear materials through the Plutonium Immobilisation and Geological Disposal Facility programmes. 4.8 The liability is a single point estimate within a broad range of outcomes built on a series of assumptions, due to inherent uncertainty over the next century. The government actively challenges and monitors NDA’s plans and progress through robust governance, with spend subject to value for money assessments. 4.9 NHS Resolution (NHSR) continues its work to manage clinical negligence and other claims against the NHS in England. NHSR is committed to helping the NHS learn from claims. It is working directly with providers of healthcare services, alongside other national and local bodies working on patient safety, to share learning and best practice across the NHS to drive safety improvement. 4.10 In addition, DHSC and NHSE continue to prioritise patient safety and learning across the NHS so that harmful patient events are significantly reduced. This includes ongoing work to progress key measures under the NHS Patient Safety Strategy, which sets out how the NHS would improve patient safety continuously. 4.11 The coalition government introduced new public service schemes from 2014 to 2015. The main changes were to increase the scheme normal retirement ages to the state pension age (except for the police, firefighters, and the armed forces who have a normal retirement age of 60), increase member contributions, and move from a final salary to a career average design. Separately, the indexation of public service pensions was changed from RPI to CPI. 4.12 The government also maintains the Cost Control Mechanism, which provides for automatic adjustments to scheme design if certain costs move outside of a set corridor. 4.13 The government’s preferred measure of the cost of the schemes remains the OBR’s long-term projection of spending on pension benefits as a share of GDP, rather than the figure of accrued liabilities, including due to the difficulties in interpreting the liability figure previously noted by the PAC.