All local public bodies, including local authorities, police and fire bodies and local NHS bodies in England, are subject to audit from external auditors.
In 2017-18, auditors found that more than 1 in 5 local public bodies did not have proper arrangements in place to secure value for money for taxpayers. The numbers are worst for local NHS bodies such as clinical commissioning groups and hospital trusts, where 38% did not have proper arrangements.
Some local bodies are also not putting enough information in the public domain about their performance, including reports from their external auditors.
Central departments need to make clear their expectations, not only for what is made publicly available, but also for making the information accessible to users and so helping citizens to hold local bodies to account.
As a committee committed to transparency we conclude that there is a need for a step change in transparency by local bodies. This is particularly the case for many NHS bodies.
Local bodies should also be taking auditors’ concerns seriously and addressing them promptly, but there appear to be few consequences for those who do not. Even where local auditors use their additional reporting powers to highlight failings, this does not always lead to the bodies taking immediate action.
While there is more for local bodies to do in acting on auditors’ findings, there is also a role for central government departments in holding local bodies to account for their performance and management.
All central government departments state they are fully aware of issues being reported locally, but when significant concerns are highlighted at individual bodies, central departments are not doing enough to make sure that local bodies take prompt corrective action, or to share learning that could help other bodies avoid the same problems.
As more public bodies work together to deliver services the landscape for audit is becoming more complicated. Auditors can audit one public body but not the relationship between the two.
“Taxpayers must be assured that their money is well-spent but in too many cases local bodies cannot properly safeguard value.
“Particularly concerning are NHS bodies such as Clinical Commissioning Groups and hospital trusts: last year almost two in five did not have adequate arrangements.
“As we reported last week, many CCGs are underperforming and this must improve as they take on responsibility for commissioning services across larger populations.
“It is vital that local bodies take auditors’ concerns seriously, address them swiftly and ensure meaningful information on performance is made accessible to the public.
“Our report sets out ways central government can help to drive improvements at local level and we urge it to respond positively to our recommendations.”
Conclusions and recommendations
Local auditors are identifying significant weaknesses in an increasing number of local bodies’ arrangements to secure value for money, with limited consequences for the local bodies themselves. In 2017-18, more than 1 in 5 local public bodies did not have proper arrangements in place. The numbers are worst for local NHS bodies such as clinical commissioning groups and hospital trusts, where local auditors qualified 38% of their conclusions in respect of value for money arrangements. While most of the audited bodies who responded to the NAO's information request claim to have plans in place to address the weaknesses highlighted, only 5% could say they had fully implemented their plans. Even where local auditors use their additional reporting powers to draw the public's attention to a particular issue, this still does not always lead to immediate action. Central government departments also need to do more to hold local bodies to account for their performance and management arrangements; at present there is no direct consequence of receiving a qualified report from a local auditor.
Recommendation: Departments should set out, by the end of September 2019, clear expectations of how local bodies should respond to weaknesses reported by local auditors in 2018-19, including the potential consequences for local bodies who fail to improve.
Departments are not doing enough to act on the performance information they gather and provide local bodies with an overview of issues that could help them strengthen their arrangements. Local bodies should take auditors’ concerns seriously and address them promptly, but there appear to be few consequences for those who do not. Central government departments can and do gather information about the issues on which local auditors report. But when significant concerns are highlighted at individual bodies, central departments are not doing enough to make sure that local bodies take prompt corrective action, or to share learning that could help other bodies avoid the same problems.
Recommendation: Departments should report by the end of September 2019 on how they have made use of the information gathered through their monitoring arrangements in 2018-19 to:
- identify concerns and examples of good practice for wider sharing; and
- challenge local bodies to demonstrate they are strengthening their arrangements.
Some local bodies do not make all of the information reported by the local auditor about their performance and management readily available, weakening local transparency. Local auditors' reports provide information about the key risks that auditors have identified and how the body is addressing them, as well as independent assurance over whether the local body has properly accounted for its money and had proper arrangements in place to manage its business and finances. The extent to which local bodies put information received from local auditors in the public domain varies between sectors and between individual bodies. Even where information is available, it is not always easy to locate. Central departments stated that a wide range of performance information is in the public domain, but acknowledged it can be hard for citizens to find out about what is happening inside large public bodies.
Recommendation: Departments should, by the end of September 2019, set out clearly to local bodies their expectations of the information that should be made publicly available to improve transparency, including information provided by the local auditor.
The lack of accessible and transparent information reduces the extent to which citizens can hold local public bodies to account for their performance and management. Information that sets out publicly how well local public bodies are managing their business and finances and highlights where there are significant weaknesses helps citizens hold their local public bodies to account. If this information is difficult to locate or presented in language that is difficult for the lay-person to understand, it is less useful. Where local bodies do publish information provided by local auditors, departments accepted that it can be hard for any citizen to find it.
Recommendation: Departments should, by the end of September 2019, set clear expectations of how local bodies should ensure that the information provided is accessible to all users and enables citizens to hold local bodies to account.
We are concerned that, as partnership working becomes more complex, accountability arrangements will be weakened, and the performance of individual local bodies will become less transparent. Local public bodies are increasingly working in partnership to provide public services and these arrangements are becoming more complex. These are often non-statutory arrangements and can involve NHS bodies (commissioners and providers), local authorities and other public or private organisations. Over the last three years, concerns over partnership working arrangements have increasingly been a reason for local auditors qualifying their value for money conclusions. But local auditors can only report on the arrangements in place within the individual bodies they audit, so only provide a partial view of how a partnership is performing. Central departments currently say little in their Accountability Systems Statements about how they use information reported by local auditors. It is crucial, that central departments explain in overall terms what assurance they take from local audit findings and ensure that partnership funding arrangements and lines of accountability are absolutely clear and transparent.
Recommendation: Departments should, in their next accounting officer systems statements, expand on:
- the use of the assurance provided by local auditors; and
- how they will get assurance in areas not covered by local audit, such as how partnerships are held to account for joint decisions and responsibilities.