Source · Select Committees · Public Accounts Committee
Recommendation 17
17
Rejected
Treasury and MHCLG claim alternative methods monitor local authority financial health.
Conclusion
The Treasury believes that it and MHCLG do know what is going on in the local authority area, and that there are other ways, beyond audited accounts, for them to check the financial health of a local authority.37 MHCLG added that, while accounts are important, they are not the only means by which it understands what is going on in the sector. It pointed to three other means: sustainability financial tools looking at other forms of published data; public interest reports that are still produced by auditors; and broader engagement with the sector. MHCLG described the broader engagement with the sector as informal conversations held between its teams across the country and local authorities, developing soft intelligence and informing the department about authorities at financial risk.38
Government Response Summary
The government disagrees with the premise that MHCLG lacks sufficient oversight of local government, stating that MHCLG uses modelling and other 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.