Council Finance Officers should ALL be responsible for scrutinising Local Enterprise Partnerships

“Section 151 officers [Responsible Financial Officer of a council, often called a Chief Financial Officer] should be given a beefed up role in ensuring Local Enterprise Partnerships spend public money wisely, according to a government-commissioned review.

The review, by Department for Communities and Local Government (DCLG) non-executive director Mary Ney, was instigated after MPs raised concerns over transparency and governance.

It found a lack of consistency in how section 151 officers overseeing LEPs are able to influence decisions and provide advice.

The review said that, accordingly, the government, in association with CIPFA (the Chartered Institute for Public Finance and Accountancy), should revise the National Assurance Framework (NAF), which sets out what government expects LEPs to cover in their local assurance frameworks.

Ney said: “The clarification of the role of the section 151 officer could also consider the scope for the LEP chief executive and the section 151 officer to provide a formal joint annual governance statement which is reported to the LEP board.

“It is also recommended that the NAF sets a requirement for the section 151 to provide a report to the Annual Conversation on their work for the LEP and their opinion with a specific requirement to identify any issues of concern on governance and transparency.”

Changes to the framework should cover:

mechanisms the section 151 officer uses to fulfil their role;
requirements in terms of access to decision-making bodies;
ability to provide written and verbal financial advice;
role of their transactional services;
operation of normal checks and balances in approving expenditure;
management of risk of fraud and corruption;
monitoring of programme spend against resources;
treasury management and borrowing;
role of internal audit and external auditors and provision of an audit opinion for the LEP;
visibility of reporting arrangements to both the accountable body and the LEP
production of accounts;
inter-relationship with the LEP’s own accounts, if relevant.
Last year, the National Audit Office identified concerns in governance arrangements for LEPs.

Amyas Morse, head of the National Audit Office, said: “LEPs’ role has expanded rapidly and significantly but they are not as transparent to the public as we would expect, especially given they are now responsible for significant amounts of taxpayers’ money.

“While the Department has adopted a ‘light touch’ approach to overseeing Growth Deals, it is important that this doesn’t become ‘no touch’.”

A subsequent inquiry by the House of Commons local government select committee concluded that the DCLG, “should enforce the existing standards of transparency, governance and scrutiny before allocating funding. LEPs themselves also need to be more transparent to the public by, for example, publishing financial information”.

Separately, this week’s review found that many LEPs are frustrated by the mismatch between long-term LEP spending programmes and annualised budgets resulting from central government funding arrangements.

Nye’s report said: “This could also impact on good governance if late and speedy decisions are made by LEPs which give insufficient time for all the checks and balances of the normal processes.

“The annual uncertainty of funding also has the consequence of some LEP staff being on fixed-term contracts, which is counter-productive in terms of efficiency and may have unintended impacts on good governance if it leads to insufficient organisation stability and continuity.”