Localis, a leading independent think-tank, has released a report urging English councils to renew their commitment to high ethical standards in the wake of local financial governance reform.
Titled “Present Tense: renewing and reforming local financial governance towards long-term resilience and sustainability”, the report highlights the challenges faced by councils since the abolition of the Audit Commission in 2010 and the need for improved governance to effectively rebuild local public finances.
The report recommends that councils shift towards long-term financial planning in line with anticipated multi-year settlements and create organizational cultures that embrace challenge and hold town hall leaders accountable.
To achieve this, the report suggests formalizing checks and balances, providing statutory monitoring officers with more support and protection, reviewing whistleblowing policies, and strengthening internal audit functions.
The report also calls for a national body or set of local bodies to oversee the local audit system, set standards, manage contracts, and maintain quality of audit, as well as overseeing the strategic functions of local authorities.
Localis chief executive Jonathan Werran emphasized the importance of renewing governance, stating, “The task for local authorities is extremely challenging- to focus on meeting their statutory obligations and pursuing innovative governance strategies without compromising their core functions.”
The report’s senior researcher, Callin McLinden, added that “the erosion of governance capacity has undermined councils’ ability to manage finances, oversee contracts, and plan effectively” and called for urgent reforms to create a more accountable, transparent, and sustainable system of local government finance.
Guy Clifton, Local Government Value for Money Director at Grant Thornton UK LLP, one of the world’s leading organizations of independent assurance, tax, and advisory firms, also commented on the report, stating, “As auditors of local government, we recognize the diagnoses set out in this report.”
The report also includes recommendations for central government, such as providing a framework for local government to establish a clear definition of good governance and outlining the different roles and responsibilities of local authorities.
Other recommendations include shifting from a centralized approach to local government financing to empower local authorities to manage their finances strategically, providing stable and long-term policies at the level of place, and supporting recruitment efforts to attract and retain experienced governance officers.
In response to the report, a spokesperson for the government stated that they are committed to working with local authorities to ensure they have the resources they need to deliver vital services and “will continue to work towards a fairer funding system for all local authorities.”
The report concludes with a list of specific recommendations for local government and central government, urging collaboration between the two to rebuild trust and ensure resilient local finances in the long-term.
The full report is available for download on the Localis website and has already received support from various organizations, including Grant Thornton UK LLP.
Derick is an experienced reporter having held multiple senior roles for large publishers across Europe. Specialist subjects include small business and financial emerging markets.