Source · Select Committees · Public Accounts Committee
Recommendation 15
15
The Department told us that during the early months of the pandemic it developed greater...
Conclusion
The Department told us that during the early months of the pandemic it developed greater structure and a stronger framework around exceptional financial support for individual authorities. Exceptional financial support is used where the Department accepts authorities face unmanageable financial pressures despite other government support measures.36 The Department asserted that it had been transparent in relation to cases where Ministers had agreed to provide exceptional financial support.37 However, the Department did not and does not share information on the total number of authorities that have approached it in relation to financial pressures, or the number of authorities where the Department has identified financial concerns itself. Similarly, while the NAO calculated the number of authorities at different levels of risk of financial failure using Departmental thresholds for comparing COVID-19 related funding gaps to reserves for individual authorities, the Department did not share with us or the NAO its own assessment of authorities at risk or how this had changed over time.38
Government Response
Acknowledged
HM Government
Acknowledged
2.10 The government agrees with the Committee’s recommendation. Target implementation date: October 2021 2.11 Whilst the department has stewardship of the overarching system, local authorities remain independent from central government, are responsible for managing their budgets in line with local priorities and are held accountable by local communities. The department does not performance manage local authorities, but relies on a series of checks and balances, including audit, as part of a wider accountability framework. 2.12 The department has closely monitored the pandemic’s impact on local authorities and responded rapidly to a small number of requests for exceptional financial support. All capitalisation directions were published on Gov.uk. 2.13 The department has considered how it engages local authorities at risk of experiencing financial, governance or service delivery challenges, to ensure that government takes action, where appropriate, consistently. 15 2.14 In the wake of the pandemic, the department has implemented changes to its approach. The Government Internal Audit Agency (GIAA) reviewed the design of intended changes and improvements being made to the stewardship framework, intended to ensure flexibility for responding to emergencies, and improve on other issues within the previous framework of assurance. In 2021-22, GIAA will undertake an in-depth assurance review to provide assurance that the framework is working as intended, and manages risks highlighted by the National Audit Office. Since the onset of the pandemic the department has increased its engagement across the sector and improved its internal processes around risk. The department also agreed principles and an approach to dealing with requests for additional support through the Exceptional Financial support process. 2.15 Regarding Croydon Council, as the external auditors noted, “the depth of the issues …existed prior to the pandemic” but were exacerbated by it. Following a non-statutory review, the Secretary of State appointed an improvement and assurance panel. The department will continue to engage with Croydon and consider the panel’s recommendations, which alongside the Secretary of State’s responses are published on Gov.uk. The department has taken on board lessons from this process and this is reflected in the design of external assurance reviews for councils requesting financial support. The department will write in October 2021 to set out its response to the Committee.