“NHS and councils full of financial problems, says watchdog”

“National Audit Office shocked by state of bodies including police and fire authorities.

The number of NHS and local government bodies with significant financial weaknesses in their ability to give value for money is unacceptably high and increasing, according to Whitehall’s spending watchdog.

The National Audit Office has examined the financial statements from nearly 937 local health authorities, councils, police and local fire bodies which are responsible for about £154bn of net revenue spending every year.

Auditors conclude in a report published on Wednesday that the number of local bodies with significant weaknesses increased from 170 (18%) in 2015-16 to 208 (22%) in 2017-18.

It follows the publication of an International Monetary Fund report in October which found that the UK’s public finances were among the weakest in the world after the 2008 financial crash.

Sir Amyas Morse, the head of the NAO, said he was shocked by the persistent high level of qualified audit reports at local public bodies.

“A qualification is a judgment that something is seriously wrong, but despite these continued warnings, the number of bodies receiving qualifications is trending upwards,” he said.

“Let us hear no cries of: ‘Where were the auditors?’ when things go wrong. The answer will be: ‘They did the job, but you weren’t listening.’

“This is not good enough. Local bodies need to address their weaknesses, and departments across government should ensure they are challenging local bodies to demonstrate how they are responding.”

Each year, local auditors give an opinion on whether local public bodies have produced financial statements which comply with reporting requirements and are error-free, and conclude whether local public bodies have arrangements to manage their business and finances.

Wednesday’s report examined accounts from 495 local authorities, local police and local fire bodies in England; and 442 local local NHS bodies in England, which include clinical commissioning groups, NHS trusts and NHS foundation trusts.

In the NHS, the number receiving qualified accounts rose from 130 (29%) to 168 (38%) across the same period. The number of local government bodies receiving qualified conclusions was 40 (8%) in 2015-16, but 18% of single-tier local authorities and county councils received a qualification in 2017-18.

Meg Hillier, the chair of parliament’s public accounts committee, said: “It is deeply concerning that local auditors are raising increasing numbers of concerns about local bodies’ arrangements to secure value for money, but these are often not being listened to and there is no consequence for the local bodies themselves.

“With ever-stretched public services, citizens deserve to know that there are effective arrangements in place to make sure they are getting value for money.

“Local auditors should be using the full range of their powers and local bodies should be acting on their findings transparently, with departments holding them to account.”