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Greater oversight of local governance needed as NAO slams government’s lack of transparency

Oversight of local governance systems must be improved by the government to help councils cope with increasing financial and demand pressures, according to the National Audit Office (NAO).

The report found significant failings with the government’s oversight, transparency, and data collection, which it said was undermining its ability to evaluate local governance effectively.

This follows the NAO’s report last week which revealed that 22% of public bodies were found to have “significant weaknesses” in their financial health in 2017-18, with the NAO’s head Sir Amyas Morse warning: “Let us hear no cries of ‘where were the auditors?’ when things go wrong. The answer will be ‘they did the job, but you weren’t listening.’”

The Ministry of Housing, Communities and Local Government is responsible for ensuring oversight of local governance contains the right checks and balances; but the NAO said it does not systematically collect data on governance, which means it can’t rigorously assess issues to see if they’re isolated or symptomatic of failings in the system.

It can intervene formally or informally at councils with concerns surrounding their governance systems but because this process is not always revealed publicly its scale and effectiveness are not open to scrutiny.

The NAO said it recommends that the department works with local authorities to assess the implications to various governance issues identified, and should examine ways to increase transparency and openness.

Amyas Morse commented: “Poor governance can make the difference between local authorities coping and not coping.

“Given the significant challenges these bodies face, the government needs to take the lead in addressing weaknesses in the local governance system to ensure that local arrangements function as intended and support local decision-making.”

The NAO noted the department should adopt a strong leadership role in overseeing the network of organisations managing key aspects of local decision making.

In its report, the spending watchdog stated that significant challenges in funding cuts and demand surges had raised the risk of authorities failing to remain financially sustainable and deliver services which increases the importance of good governance systems.

It said many authorities had responded by pursuing large-scale transformations or risky commercial investments, and external auditors had also raised concerns about the effectiveness of the internal checks and balances on the councils they were auditing.


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