Source · Select Committees · Public Accounts Committee
Recommendation 3
3
Accepted
MHCLG should explain approach to identifying local authorities under financial pressure and audit deadline consequences
Conclusion
We are concerned that MHCLG does not have sufficient oversight of local government to foresee issues and intervene where appropriate. Government’s ability to effectively monitor financial pressure within local authorities is inevitably undermined while authorities are not producing audited accounts, or while their accounts are subject to disclaimed or heavily qualified audit opinions. This lack of transparency and assurance over local authority matters is occurring at a time of worsening financial health for some local authorities. It is not clear how the statutory audit backstop will be enforced or what consequences there will be for local authorities who fail to have their accounts audited by the backstop date. 5 recommendation a. Alongside the Treasury Minute response to this report, MHCLG should write to the committee explaining its approach to identifying local authorities that are under financial pressure and submit their latest risk assessment analysis. b. MHCLG should also, within six months, set out the consequences for local authorities failing to meet the backstop deadline.
Government Response Summary
The government agrees with the recommendation but disagrees with the premise that it lacks oversight, stating it already uses modelling and financial information to monitor local authorities, as detailed in an accompanying letter. It does not explicitly commit to setting out new consequences for non-compliance within six months.
Government Response
Accepted
HM Government
Accepted
The government agrees with the Committee’s recommendation. Minute. The government disagrees that MHCLG does not have sufficient oversight of local government to foresee issues and intervene where appropriate. As evidenced in the recent NAO report on local government financial sustainability, MHCLG uses modelling and a range of other financial information to understand the overall financial resilience of the sector, as well as the relative position of individual local authorities from a finance and governance perspective. These are set out in the accompanying letter.