Title

DEPARTMENT FOR LEVELLING UP, HOUSING AND COMMUNITIES

Council governance systems 'inadequate' for austerity era

The Government has not done enough to ensure that governance systems in local authorities are suitable for an ‘era of financial pressure and rapid change,' MPs have warned.

The Government has not done enough to ensure that governance systems in local authorities are suitable for an ‘era of financial pressure and rapid change,' MPs have warned.

A new report from the Public Accounts Committee said that local governance arrangements were being ‘stretched and tested' as cash-strapped councils take more risks to meet increasing service demands.

The report said local authorities were pursuing shared services, expanding outsourcing and taking on commercial activities at the same time as cutting funding for corporate activities like governance.

While the report acknowledged that governance arrangements were ‘generally robust' it did find that in some councils there were audit committees that do not provide sufficient assurance.

The committee also found ineffective internal audit arrangements in a number of local authorities and weak arrangements for the management of risk in commercial investments.

‘This is not acceptable in the more risky, complex and fast-moving environment in which local authorities now operate,' the report concluded.

The committee's report was also critical of the Ministry of Housing, Communities, and Local Government's (MHCLG) oversight of local authority governance, describing it as ‘reactive and ill-informed'.

Committee chair Meg Hillier said: ‘On the rare occasions a local authority fails, the impact on local citizens is severe.

'Residents facing decimated services get no comfort from being told that their council's dire finances were an open secret.

‘The Government needs to recognise the extra pressure that squeezed budgets and increased commercial risks are having on local government and make sure it is monitoring the risks effectively so that it can be alert to the impact of changes on local government.'

Chief executive officer of the Chartered Institute of Public Finance and Accountancy, Rob Whiteman, said: 'At a time when councils are dealing with fewer resources, governance needs to be strengthened rather than weakened.'

Mr Whiteman's comments are in marked contrast to the views of the Local Government Association, which has previously said that 'with funding from central Government continuing to be reduced, there is an argument for less rather than more oversight from central government'.

An MHCLG spokesman said: 'We are pleased the committee welcomes the Government's commitment to improve oversight of the accountability system for local government.'

DEPARTMENT FOR LEVELLING UP, HOUSING AND COMMUNITIES

Recruitment challenges restricting pace of Sandwell improvement, peers find

By Joe Lepper | 13 March 2026

Recruitment challenges are hindering continued improvement at Sandwell Council, a Local Government Association corporate peer challenge review has warned.

DEPARTMENT FOR LEVELLING UP, HOUSING AND COMMUNITIES

OBR warns pressures on council finances remain

By Sir Stephen Houghton | 13 March 2026

While the Local Government Finance Settlement represents a welcome step towards fixing local authority finances, the absence of long-term financial stability...

DEPARTMENT FOR LEVELLING UP, HOUSING AND COMMUNITIES

Future Forum: Councils urged to embrace Total Place

By Martin Ford | 12 March 2026

Councils should seize the opportunity presented by ministers’ renewed interest in Total Place, according one of its pioneers.

DEPARTMENT FOR LEVELLING UP, HOUSING AND COMMUNITIES

Future Forum: Councils must put 'rules and tools' in place ahead of political change

By Ann McGauran | 12 March 2026

Councils need to put ‘rules and tools ‘ in place if they are expecting a political change ‘or a lot more challenge’, the Future Forum has heard.

Popular articles by William Eichler