Source · Select Committees · Public Accounts Committee
Recommendation 16
16
Rejected
Insufficient audited accounts undermine local authority transparency and financial health.
Conclusion
We questioned MHCLG as to whether it has sufficient oversight over local government to foresee financial issues and intervene where appropriate. The lack of audited accounts being published leads to a lack of transparency over local authority matters during a time of worsening financial health for those same local authorities as rising populations, higher demand on social care and lower council incomes are putting local authorities under pressure.36 In 2023 Birmingham City, Nottingham City and Woking Borough councils issued Section 114 notices indicating that forecast income was insufficient to meet forecast expenditure, meaning that they were effectively bankrupt.
Government Response Summary
The government disagrees that MHCLG lacks sufficient oversight of local government, stating that MHCLG uses existing modelling and financial information to understand the sector's resilience.
Government Response
Rejected
HM Government
Rejected
The government agrees with the Committee’s recommendation. Recommendation implemented: May 2025. MHCLG has written to the Committee alongside the publication of this Treasury 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.