Scope of the inquiry
English local authorities have faced significant challenges since 2010-11 as funding has reduced while demand for key services has grown. Key services that support vulnerable people, such as social care and housing, are now under enormous pressure. Other important services such as planning, transport, and cultural services have seen spending cuts. Authorities are falling back on financial reserves and increasingly relying on generating other sources of income, which comes with greater risks.
While elements of local governance arrangements are locally defined, core components are set out in a statutory framework overseen by the Ministry of Housing, Communities & Local Government (the Department). The Department is responsible for ensuring that this framework contains the right checks and balances, that it works, and for changing the system if necessary. It does not assess the governance of individual authorities.
The National Audit Office’s recent report on local authority governance found that the Department does not collate systemic data on governance and its work to date has been primarily focused on financial risk. The information available to the Department has not enabled it to assess the implications of the governance concerns relating to scrutiny committees, the role of local auditors and of section 151 officers.
The Committee’s recent report on Auditing local government concluded that there were few consequences for local bodies that did not take external auditors’ concerns seriously and that central departments were not doing enough to ensure local bodies take prompt corrective action. In 2014 the Committee had concluded that the Department had not assessed whether the local accountability system operates effectively. It recommended that the Department focuses on the effectiveness of mechanisms that have a specific value for money role, such as scrutiny committees and local auditor roles. The Committee reported on local government spending and on financial sustainability of local authorities in February 2019 and June 2018 respectively.
The Committee will use this hearing to question officials from the Ministry of Housing, Communities and Local Government (MCHLG) about their oversight and knowledge of governance issues in local government. Members will also examine how the Department could adopt a stronger leadership role to oversee and co-ordinate organisations managing the governance framework.