Source · Select Committees · Public Accounts Committee
Recommendation 18
18
Accepted
MHCLG's oversight gaps exacerbated by increasing delays in local authority accounts.
Conclusion
As such, MHCLG told us that it had a good understanding of the financial pressures facing particular local authorities and that it was confident in knowing where the issues were.39 MHCLG did note though that quirks can occur, referencing Barnet Council issuing a s114 notice where the council made unlawful transactions relating to pensions in 2020.40 MHCLG was not aware of the issue before the council declared it.41 We highlighted to MHCLG the importance of understanding where local authorities are under pressure from increasing expenditure, on SEND for example, with which it agreed.42 35 WGA0001 36 For example, House of Commons Library, Why are local authorities going ‘bankrupt’?, July 2024 37 Q 17 38 Q 31 39 Qq 31, 34 40 Letter from MHCLG to the Committee of Public Accounts, 6 February 2025 41 Q 34 42 Q 38 13 Increasing numbers of late or uncompleted Local Authority accounts makes it more difficult for councillors or their officers to spot irregularities or trends which could enable them to take earlier interventions to prevent section 114 notices. When this happens, services tend to be reduced and council tax increased.
Government Response Summary
The government rejects the committee's implied criticism of MHCLG's oversight, asserting that MHCLG already uses modelling and various financial information to understand local authority financial resilience, and states the recommendation is implemented.
Government Response
Accepted
HM Government
Accepted
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.