Source · Select Committees · Public Accounts Committee
Recommendation 7
7
Accepted
Significant delays persist in local government external audit assurance, creating information gaps.
Conclusion
Local audit, including reports on value for money arrangements within local authorities, helps to provide transparency and assurance to both central government and taxpayers on local authorities’ plans to achieve effective services. At 31 March 2024 only 25% of local government bodies had up- to-date external audit assurance on their 2022–23 financial statements, leading to significant gaps in information available.11 MHCLG told us that since the introduction of the first backstop in December 2024 (by which date a local government body should have published its audited accounts up to and including 2022–23), it now has returns from around 94% of the sector, although these may be disclaimed audit opinions because the auditor ran out of time to complete their work.12 MHCLG specified that local audit is one of a range of tools it uses to understand the position of local government, as audited accounts provide a retrospective view of local authority finances.13 Nevertheless, it stated its intention to set up the local audit office, with the aim of having no disclaimed accounts because of local audit delays by the end of 2027–28.14
Government Response Summary
The government states the recommendation is implemented, outlining its Local Government Accountability Framework and ongoing reforms to oversight. It highlights the recently announced Local Government Outcomes Framework, to be published with the 2026-27 Local Government Finance Settlement and active from April 2026, which will support funding simplification and value for money.
Government Response
Accepted
HM Government
Accepted
1.1 The government agrees with the Committee’s recommendation. Recommendation implemented 1.2 Through its Accounting Officer Statement, the Ministry of Housing, Communities and Local Government (MHCLG) has set out how it ensures value for money through the Local Government Accountability Framework, and how responsibility is split between local authorities and central government departments. MHCLG collects and analyses information from a wide range of sources to provide assurance that the core Local Government Accountability Framework is working and to assess risk. Sources include financial data, information on outcomes, and information relating to specific services, as well as soft intelligence. MHCLG also reviews publicly available statistical returns provided by local authorities and local intelligence collected through relationships built with local authorities by teams in the department. 1.3 MHCLG is leading reforms to government oversight of local authorities, to move towards outcomes-based accountability, focused on the impact of spending on local communities. On 3 July 2025, the Deputy Prime Minister announced the new Local Government Outcomes Framework. MHCLG wrote to the Committee to provide further details. The Framework supports the simplification of local authority funding by setting 15 priority outcomes that central government wants to work with local government to deliver with their more flexible funding. With simpler funding and a focus on outcomes, local leaders will have greater flexibility to decide on approaches that provide the best value for money and deliver improvements for their areas. MHCLG’s work to strengthen the local audit system will also provide independent assurance that arrangements are in place to secure value for money from these decisions. 1.4 The Framework will be published alongside the provisional Local Government Finance Settlement for 2026-27 and will be actively used to support outcome delivery from April 2026. As these reforms are developed, MHCLG will continue to update the Committee.