Background to the report

Local authorities are accountable to their communities for how they spend their money and for ensuring that this spending represents value for money. Local politicians and officers operate within local governance frameworks of checks and balances to ensure that decision-making is lawful, informed by objective advice, transparent and consultative.

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Good governance means that proper arrangements are in place to ensure that an authority’s intended objectives are achieved. Key elements of the statutory framework ensure that authorities remain financially sustainable.

Authorities have faced significant challenges since 2010-11 as funding has reduced while demand for key services has grown. Not only are the risks from poor governance greater in the current context as the stakes are higher, but the process of governance itself is more challenging and complex. Governance arrangements have to be effective in a riskier, more time-pressured and less well-resourced context.

Content and scope of the report

Our report examines whether local governance arrangements provide local taxpayers and Parliament with assurance that local authority spending achieves value for money and that authorities are financially sustainable. The report addresses this question in three separate parts:

  • Part One examines the pressures on the local governance system;
  • Part Two explores the extent to which local governance arrangements function as intended; and
  • Part Three assesses whether the Department is fulfilling its responsibilities as steward of the system.

Report conclusions

Local government has faced considerable funding and demand challenges since 2010-11. This raises questions as to whether the local government governance system remains effective. As demonstrated by Northamptonshire County Council, poor governance can make the difference between coping and not coping with financial and service pressures. The Department places great weight on local arrangements in relation to value for money and financial sustainability, with limited engagement expected from government. For this to be effective, the Department needs to know that the governance arrangements that support local decision-making function as intended. In order to mitigate the growing risks to value for money in the sector the Department needs to improve its system-wide oversight, be more transparent in its engagement with the sector, and adopt a stronger leadership role across the governance network.

“Poor governance can make the difference between local authorities coping and not coping. Given the significant challenges these bodies face, the government needs to take the lead in addressing weaknesses in the local governance system to ensure that local arrangements function as intended and support local decision-making.”

Amyas Morse, the head of the NAO


Publication details

Press release

View press release (15 Jan 2019)

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