Press release
Embargo date: from 00.01 a.m., Tuesday 3rd December 2024
Renew commitment to high ethical standards, report on local financial governance reform argues
English councils seeking to restore trust in how they spend council taxpayers’ money should recommit to the Nolan principles underpinning high standards in public life, a report published today by the think-tank Localis has advised.
In a new report entitled “Present Tense: renewing and reforming local financial governance towards long-term resilience and sustainability”, Localis acknowledges the severe challenges faced by councils since the abolition in 2010 of regulator the Audit Commission and straitened local finance settlements but argues improved governance will be essential to ensuring attempts by the new government to rebuild local public finances are effective.
Among principal recommendations aimed at councils, the report calls for a shift towards long-term financial planning in line with multi-year settlements anticipated in next spring’s Comprehensive Review, and for local authorities to create organisational cultures that embrace challenge and criticism and hold town hall leaders accountable.
This process would be achieved, the paper suggests, by:
In their recommendations to central government, the report authors call for a national body or set of local bodies to oversee the local audit system by setting standards, managing contracts, maintaining quality of audit as well as overseeing the strategic functions of local authorities.
A further key recommendation is for central government to provide a framework for local government that establishes a clear definition of good governance and outlines the different roles and responsibilities of local government – effectively moving away from the current centralised approach to council financing and empowering local authorities to manage their finances strategically.
Other recommendations in the study include a call to give councils more resources to clear the backlog of audits and also to recruit and retain experienced governance officers by working with professional organisations.
Localis chief executive, Jonathan Werran, said: “In renewing governance, the task for local authorities – to focus on meeting their statutory obligations and pursuing innovative governance strategies without compromising their core functions – is extremely challenging.
“Many councils are already actively engaged in reform and organisational development to respond to the challenges we identified and many of the recommendations are drawn from this best practice.
“However, there is still work to be done in universalising a reformist mindset in the sector and ensuring that an ethos of public service, combined with long-term, strategic thinking, guides local decision-making and service provision everywhere in England.”
Localis senior researcher, Callin McLinden, said: “Local authorities continue to face unprecedented financial challenges, exacerbated by years of austerity and outdated funding models reliant on central government grants.
“Our report, Present Tense, reveals an alarming erosion of governance capacity, undermining councils’ ability to manage finances, oversee contracts, and plan effectively.
“It calls for urgent reform to create a more accountable, transport, and sustainable system of local government finance that empowers councils to deliver for their communities.
“Collaboration between the government and local authorities will prove absolutely vital to rebuilding trust and ensuring resilient local finances in the long-term.”
Guy Clifton, Local Government Value for Money Director, Grant Thornton UK LLP, said: “As auditors of local government we recognise the diagnoses set out in this report.
“Whilst high profile governance failures at some councils should not reflect on the sector as a whole, these failures are a symptom of the need to renew the system of governance.
“All councils continue to operate in an environment of increasing complexity, uncertainty and volatility.
“The report provides an important contribution to the changes needed to improve decision making, scrutiny and the stewardship of public finances nationally.”
Simon Christian, Local Government Consulting Director, Grant Thornton UK LLP, said: “Now is a time for renewal in governance in the local government sector.
“The systems of oversight and scrutiny need to be improved both nationally and within local councils as, if the financial challenges ahead for the sector are to be met, robust and effective governance is essential.”
ENDS
Press enquiries:
Nuala Cudmore, Communications Manager, Localis
(Mobile) 07510 691149 / (Email) nuala.cudmore@localis.org.uk
Notes to Editors:
Localis is an independent think-tank dedicated to issues related to politics, public service reform and localism. We carry out innovative research, hold events and facilitate an ever-growing network of members to stimulate and challenge the current orthodoxy of the governance of the UK.
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About Grant Thornton UK LLP
Grant Thornton is one of the world’s leading organisations of independent assurance, tax and advisory firms. We are an adviser that delivers technical expertise and a personal, proactive and agile service that goes beyond. The UK member firm is part of a global network that employs 62,000 people in over 140 countries. The UK Grant Thornton member firm is led by over 200 partners and employs over 5,500 of the profession’s brightest minds. We are a business adviser that celebrates fresh thinking and diverse perspectives to bring you proactive insights and a service you can trust.
Grant Thornton UK LLP has been working with local authorities and other public sector clients for over 30 years. We have over 500 public sector specialists and over 200 local government clients in the UK. We are the leading provider of external audit services to local government. Our blend of consultancy, advisory and assurance expertise, including our deep analytical capabilities, means that we are a leading advisor to councils, supporting them in managing their current and future challenges and opportunities.
Find out more at www.grantthornton.co.uk
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Key report recommendations
In renewing governance, the task for local authorities – to focus on meeting their statutory obligations and pursuing innovative governance strategies without compromising their core functions – is extremely challenging. It must be acknowledged that the stripping out of funding has played a major role in the baleful proliferation of governance issues, and that ultimately local government must reckon with the cost of providing vital local services whilst also engaging in placemaking. However, increased funding alone will not solve all of the challenges facing local government. Improved governance is essential to ensuring that additional funds are used wisely and effectively.
Across the sector, many councils are already actively engaged in reform and organisational development to respond to the many challenges identified in this report. Many of the recommendations below are drawn from this best practice. However, there is still work to be done in universalising a reformist mindset across the sector, and ensuring that the ethos of public service combined with long-term, strategic thinking guides local decision-making and service provision everywhere in England.
Some specific recommendations for local government are listed below:
The government should look to shift from a centralised, adversarial approach to overseeing local government to a collaborative model, empowering local authorities to make financial decisions based on local needs and priorities. Furthermore, central government should actively support and respect local decision-making on certain matters as a principle of subsidiarity, recognising the expertise and great potential of local authorities to manage their finances and services.
It is also important that government implements more stable and long-term policies at the level of place. The provision of multi-year funding settlements is a positive start in this direction but the real test will be in the formulation and application of the forthcoming reforms to devolution and economic strategy. Central government also needs to improve communication with local authorities and work with sector-led, intermediary professional and stakeholder bodies to provide clearer guidance on its priorities.
Some specific policy recommendations for central government are listed below:
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