Plans to strengthen council finances and protect public funds published

Plans to strengthen council finances, reduce risk to public funds and ensure councils are delivering value for money for taxpayers have been published by the government.

Changes to the capital finance system will see improvements in the way that risks are monitored and will drive effective decision-making and ensure council funds are spent effectively, the government said.

Local Government Minister, Luke Hall, announced the changes in a drive to boost public trust and ensure that residents are receiving the quality of services they deserve as the country builds back from the Covid-19 pandemic.

Also confirmed is a 
new consultation on the government’s proposals for how the new regulator, the Audit Reporting and Governance Authority (ARGA), should act as the system leader for local audit within a new, simplified local audit framework.

It also includes proposals for how the government intends to implement other areas of the 
Redmond Review, which was an independent review by Sir Tony Redmond into the effectiveness of external audit and transparency of financial reporting in councils.

These include:

  • Strengthening the ways that the findings of audit are used by local bodies, including proposals for the inclusion of independent members on local audit committees.
  • Ensuring the supply of appropriately experienced and qualified local authority auditors, including amending guidance related to key audit partners.
  • Consider the functioning of local audit for smaller bodies, including whether the threshold for smaller bodies is set at the right level.

Alongside this consultation, the government has published two responses to previous local audit consultations: Allocating £15m to local bodies to help with the costs of audit and changes to regulations that will help to provide greater flexibility in payments for audits.

The government said they continue to work closely with stakeholders, including local bodies and audit firms, to refine proposals for implementing their commitments around system leadership, as well the range of other commitments they have made in response to the Redmond Review.

Commenting, Mr Hall said:

“Throughout the pandemic, we have worked closely with councils to ensure they have the resources they need to deliver vital services for their communities.

“As we build back better, we are strengthening the local audit system to deliver value for money for taxpayers, support sound investment decisions and sustain public confidence in local government.”

The government will continue to monitor the sector and keep under review whether further action and reform is needed.

They will also be engaging with local authorities and other bodies as they develop the actions for oversight and intervention to ensure capital framework remains fit for purpose.

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