“Spending watchdog urges ministry to address weaknesses in local authority governance”

“The National Audit Office has sounded the alarm about local authority governance and audit for the second time in a week.

In its latest report, Local Authority Governance, the spending watchdog said the government should improve its oversight of the local governance system in the face of increasing financial pressures on councils.

It said councils’ responses to these pressures had “tested local governance arrangements”, as some had pursued large-scale transformations or potentially risky commercial investments that added complexity to governance arrangements.

But spending to support governance fell by 34% in real terms between 2010-11 and 2017-18.

The NAO said external auditors issued qualified conclusions for around 20% of unitary and county councils, and “several authorities did not take appropriate steps to address these issues”.

A NAO survey of auditors found 27% did not agree that their authority’s audit committees provided sufficient assurance about governance arrangements.

Some councils had questioned the contribution of external audit to providing assurance on their governance arrangements, with 51% of chief finance officers wanting to see changes, including a greater focus on the value for money element of the audit.

The NAO said the Ministry for Housing, Communities & Local Government (MHCLG) did not systematically collect data on governance, and so it could not assess whether issues that arose were isolated incidents or symptomatic of failings in aspects of the system.

Ministry intervention at councils was not always made public “meaning its scale and effectiveness is not open to scrutiny or challenge”, the watchdog said.

The report’s recommendations include that the MHCLG should work with local authorities and stakeholders to assess the implications of, and possible responses to, the various governance issues it had Identified.

This would include examining the status of section 151 officers and the efficacy of their statutory reporting arrangements, the effectiveness of audit committees, the effectiveness of overview and scrutiny functions, and the sustainability and future role of internal audit. …”

http://www.localgovernmentlawyer.co.uk/index.php

“Local councils blame austerity for lack of investment in road improvements”

“Council leaders have hit back at suggestions rising revenues from car parking charges are not re-invested in roads in Great Britain.

All surplus income generated from parking charges was funnelled back into “essential transport projects”, the Local Government Association said, responding to a report from price comparison website confused.com.

Councils in Great Britain made £847m from parking activities in the 2017-18 financial year, according to confused.com’s analysis of government data.

This was a 24% increase (£165m) on the £682m they earned in 2013-14, the report calculated from local authorities’ published accounts. Over the same period, however, their spending on road improvements fell from £2.8bn to £2.4bn, confused.com said.

Amanda Stretton, confused.com motoring editor, said: “While councils are often justified in charging for parking and issuing fines for illegal parking, many motorists are confused about why this money isn’t being re-invested into our roads.

“Poor road conditions is a major concern for drivers, with roads riddled with potholes and unclear markings, it’s no wonder drivers want councils to be putting more into making these better.”

The LGA said the report ignored the effects of austerity on councils.

Martin Tett, Transport, spokesman for the Local Government Association, which represents 370 councils in England and Wales, said: “Any income raised through on-street parking charges and parking fines is spent on running parking services and any surplus is only spent on essential transport projects, such as tackling our national £9 billion roads repair backlog and other local transport projects that benefit high streets and local economies.

“This report completely ignores central government funding reductions. Between 2010 and 2020, councils will have lost 57p out of every £1 the government had provided for services, which is a much more significant source of funding for roads than surplus parking income.”

He added: “Surplus parking income is not the only source of money for roads and not all transport spend is spent on roads but can still be helpful to motorists, such as supporting concessionary bus fares to help reduce congestion.”

A government-commissioned report recently advised councils to slash parking charges to bring shoppers back to the high street. The High Street Report was carried out by a panel led by retail expert John Timpson.”

https://www.publicfinance.co.uk/news/2019/01/local-councils-blame-austerity-lack-investment-road-improvements

Many local authorities not providing value for money

“The number of public bodies in England failing to provide value for money is “unacceptably high” and increasing, the public spending watchdog has warned.

Of the nearly 1,000 councils, police, fire and NHS bodies across England, 208 (22%) were found to have “significant weaknesses” in securing value for money in 2017-18, a National Audit Office report out today revealed.

This was higher than the 170 (18%) of public bodies awarded a ‘qualified’ audit conclusion – signifying the significant weaknesses – in 2015-16.

“This increase varies between local government and NHS sectors”, the report found – with NHS bodies seemingly faring worse than other public bodies….

Financial performance issues that can lead to a qualified conclusion, include failure to meet financial targets, such as annual spending limits or delivering planned savings.

The NAO report said: “Qualified conclusions on arrangements to secure value for money locally are both unacceptably high and increasing.”

It continued: “The proportion of local public bodies whose plans for keeping spending within budget are not fit-for-purpose, or who have significant weaknesses in their governance, is too high. This is a risk to public money and undermines confidence in how well local services are managed.” …

The report also suggested that a large proportion of local bodies may not fully understand the purpose of an auditor’s conclusion on arrangements to secure value for money.

Of 61 local public bodies that responded to the NAO, 82% said auditors identified issues they were already aware of, but the NAO stressed that the auditor’s report is to provide public assurance on the adequacy of arrangements in place, not to uncover new issues.

While 95% of respondents said they had plans in place to address issues in the auditor’s report, only 5% said had already dealt with their auditor’s concerns.

Rob Whiteman, CIPFA chief executive, said: “Value for money conclusions should be treated as a cornerstone on which local bodies can show their dedication to transparency and accountability, crucial aspects of good governance in the public sector.

“Local auditors, councillors and directors should exercise their powers to hold executives to account, especially where local bodies are not taking sufficient action to address issues raised.

Meg Hillier, chair of the 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.”

https://www.publicfinance.co.uk/news/2019/01/more-public-bodies-failing-provide-value-money-says-nao

“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.”

https://www.theguardian.com/society/2019/jan/10/nhs-and-councils-full-of-financial-problems-says-watchdog

New Dorset unitary council may not be able to balance the books

“… In today’s report, the programme director for the council Keith Cheesman revealed that, whilst most of the transitional costs have been around what was expected, the cost of taking on interim staff to carry out projects related to changing to the new council have been far higher than anticipated and need extra funding.

Cheesman’s report said that the ongoing dispute between the shadow Dorset Council and Bournemouth Christchurch and Poole Council over the transfer of debts and reserves is yet to be resolved, and also warned that years of reducing employee numbers has left internal employee resources “very limited.”

The merger between Dorset County, East Dorset, North Dorset, Purbeck, Weymouth & Portland, and West Dorset councils was given the green light back in May, followed by a lengthy legal battle with Christchurch Borough Council.

Last week, Christchurch BC, which will be part of the second new council, said it was still split over the need to contribute £420,000 towards merger costs.”

http://www.publicsectorexecutive.com/Public-Sector-News/new-dorset-council-faces-unbalanced-budget-as-dispute-over-transfer-of-debts-remains-unresolved

Local authority settlement fails to address major funding issues and shortfalls

AND government has said if councils need more money they should hold referendums which might, or might not, agree to further council tax rises to make up for the shortfall.

“Last week’s provisional settlement for local government was predictably disappointing, says Richard Harbord, while the big issues of funding social care and council tax reform wait unaddressed in the political long grass.

The delayed settlement was eventually published last week, leaving local authorities little time to do any detailed work on it before Christmas.

It has to be said it was never going to be earth-shattering, being the last year of an agreed multi-year settlement negotiated four years ago.

The actual settlement says that the government are planning to increase resources by £1.3bn next year, but this seems to include a number of separate issues such as Winter Pressures Funding for social care, the bulk of which comes with conditions, and the removal of the threat of negative grant.

The Local Government Association in a somewhat low-key response says that this settlement will still leave local authorities some £3.2bn short of the resources they require to maintain a reasonable standard of service.

Other announcements were expected at the same time but a number of these did not appear. The amount of time and energy spent on leaving the European Community has left a large void in moving forward to resolve the many problems local government faces.

There was a consultation paper on business rate retention, but this has been so long discussed in the joint working parties between central government and the LGA that it is hardly new. It is now set at 75%, this is somewhat less than Eric Pickles’ 100% and the various other figures talked about over the last few years, and is perhaps a disappointing increase on the 50% which has been the scheme for the last few years.

The announcement says that the government continues to work on the Fair Funding Formula which was also expected to go out to consultation. This was never intended to take effect next year, but local authorities need to know if there are to be major changes to distribution and to account and allow for them in their medium-term financial plans.

We had already been warned that perhaps the most important of all – the options for dealing with the increasing expenditure on social care – had been put back until next Summer. This was, it will be remembered the subject of a bungled announcement during the last general election campaign which had to be withdrawn with a Green Paper promised for immediately after the vote.

This has been delayed several times. It is just too difficult to find options that are acceptable to the majority. If there is to be a central funding solution rather than an insurance solution, it will have to come from additional taxation. Politicians continue to believe that increases in taxation are to be avoided at all costs but a relatively small increase in taxation could produce workable options.

The LGA urges the government to reconsider and to improve the offer by the time of the final settlement early next year. This is extremely unlikely to happen.

The fact is that this settlement does nothing to help local authorities become sustainable and to save them from having to make even more serious cuts in services going forward.

Business rates retention may have been sorted, but the government really needs to address the issue of council tax. Hopelessly outdated and not understandable to owners of properties, it is in desperate need of reform.

The government argue that it is open to local authorities to run referendums to increase council tax by over 3 % , indeed they have encouraged local authorities to do so but the limited gains and negative publicity have put authorities off.

At the very least the values used need to be current values and the banding system needs drastic revision to reflect the fact that so many properties are valued at over £1m and should be contributing more to local services.

We do now look forward to the spending review, but there cannot be widespread optimism that all will be well.”

http://www.room151.co.uk/blogs/provisional-settlement-does-nothing-to-help-local-authorities/

Irish local authorities prepare for Brexit – ours lag behind

“Local authorities face a number of uncertainties due to Brexit but are focussed on building resilience in their areas to prepare.

Addressing the recent conference ‘Local Authorities – Implications for Local Authorities and their Areas,’ Jackie Maguire, Chair of the County and City Management Association (CCMA) said Brexit has been to the forefront of local authority considerations since the UK vote to leave the EU.

‘Preparing for the unknown is a huge challenge. In the local authority sector, our approach has been to consider all our plans and actions through the lens of Brexit, while maintaining close contact with Government and relevant departments throughout the negotiation period,’ she said.

The conference heard that as well as the potential impact on local business and economic development, there are a number of practical implications for local authorities, particularly in border regions.

Citing the current arrangement, where the Northern Irish Fire Service provides first response to call outs in parts of Donegal and giving the further example of an ongoing cross-border greenway project, she said:

‘While both the Republic and Northern Ireland have been members of the EU, we have been able to work collaboratively on shared infrastructure development and shared service provision. We now face into an unknown situation as to whether that can continue.’

The CCMA Chair also highlighted the impact Brexit may have on environmental standards, ‘Currently we apply relatively consistent environmental policies north and south; this is the best way to achieve results. The Water Framework Directive, for example, is implemented in both jurisdictions to manage river basins and improve water quality but rivers don’t stop at borders.’

‘Local authorities will do what we can to proactively mitigate against the worst impacts of Brexit and capitalise on any opportunities.’

‘This will involve not only our economic development and tourism teams but teams across our organisations – in planning, roads, housing, infrastructure and other areas. We will ensure efficient, responsive services and ambitious plans that will encourage enterprise, entice visitors and allow our areas to thrive.'”

https://www.independent.ie/regionals/argus/news/local-authorities-prepare-for-brexit-uncertainty-37611830.html