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

Building a lasting legacy through reorganisation

By Manjeet Gill | 07 August 2026

Reflecting on her experience in Wiltshire, Manjeet Gill says strong leadership and trusted relationships transform council reorganisation into lasting organi...

DEPARTMENT FOR LEVELLING UP, HOUSING AND COMMUNITIES

The workplace challenge: Preventing AI conflict before it starts

By Phil Floyd | 07 August 2026

As generative AI becomes a growing factor in employment disputes, Phil Floyd argues that the best way to prevent workplace conflicts is to foster a ‘clear ai...

DEPARTMENT FOR LEVELLING UP, HOUSING AND COMMUNITIES

Rethinking the public servant for the AI era

By Stephen Jeffares | 07 August 2026

AI has become far more capable over the past decade, but human public servants remain central to local government. Instead of replacing people, the broader q...

DEPARTMENT FOR LEVELLING UP, HOUSING AND COMMUNITIES

Creating a closer relationship

By Simon Kaye | 07 August 2026

Simon Kaye looks at the prospects for No10 North and the role it can play to help reset the relationship between local and national government

Popular articles by William Eichler