NAO report on local governance: the CfGS view

Posted on 24/01/2019 by Ed Hammond.

On 15 January the NAO published their report on local governance – the systems in place and the ability of local governance to be effective in the context of the need to deliver services that are “value for money”. The NAO’s focus is, and always has been, on finances and VfM – its work in local government, for the last few years, has been thematic, rather than looking at the work and strength of individual councils.

The NAO’s central worries are that:

  • the overall control and governance environment in local government has been degrading, and continues to degrade, and
  • a lack of central oversight is exacerbating this process.

On the first point we would agree, but we would expand that point to cover areas broader than just financial control and the role of the s151 officer. Critical though that role is, there are wider responsibilities exerted by other statutory officers. The monitoring officer and the head of paid service in particular have a vital role – other governance-facing roles such as a statutory scrutiny officer have their own part to play.  

We wouldn’t agree with the second point. We think that the primary source of accountability for councils, for what they do and don’t do, must come from the local area.

There has to be some role for “central oversight” but we’re not convinced that its removal – alone – has been the cause of the degradation that the NAO talk about. It would be just as productive to talk about the need to support and bolster scrutiny, to enhance the role of the press, to take steps to reinvigorate local democracy. We think that discussion of central oversight without reference to these other local features of accountability risks being simplistic.  

In particular, the NAO says that MHCLG needs to improve its system wide oversight.  

While system-wide oversight may need to be looked at, we are unconvinced by the argument that this is a role for MHLCG. MHCLG is not resourced to carry out this role effectively and there is nothing to suggest that, as currently organised, it has a concrete understanding of the risks, tradeoffs and opportunities which councils have to manage daily, and which feed into effectiveness and value for money.

The sector itself has demonstrated itself able to carry out much of this work – to carry out its own oversight. This has not been without incident, but the management of sustained double-digit reductions in budgets without widespread service failure demonstrates the sector’s ability to understand the need to adopt and deliver a systemic approach to how it supports local people. Sector led improvement is largely effective; its perceived shortcomings have been explained elsewhere (the risks attached to the apparent “voluntary” nature of SLI are, in our view, overblown) but it remains overall fit for purpose in a way that the kind of central inspection that we saw in the form of CPA and CAA arguably were not.

What we have now is certainly cheaper and less burdensome than what came before, although of course we recognise that the need for economy is not the most noble of public policy drivers.

Where we do agree with the NAO on the need for action is on the transparency of the existing MHCLG oversight which does happen. The NAO are in our view right to point out that existing Government activity which stops short of intervention is not sufficiently transparent.

We think, then, that the challenge is not necessarily the overall effectiveness of the system at a national level – but of the system locally. Strengthening local governance and local accountability will help to ensure that the temptation does not exist to enhance accountability at a national level by a Government wielding the proverbial two hundred mile-long screwdriver from Marsham Street.

About the Author: Ed Hammond

Ed leads CfGS's work on devolution, transformation and on support to councils and other public bodies on governance and accountability.