Making a bigger impact on value for money

By Dan Peters | 23 June 2020

Wearing a professional-looking headset, National Audit Office (NAO) head Gareth Davies jokes that he looks like he works in a call centre.

That’s not quite the case, but Mr Davies certainly isn’t doing the job he imagined when he became comptroller and auditor general a year ago.

‘I was ready for the unexpected -  but not quite for leading an organisation with everyone working from home,’ he admits.

Mr Davies took over from Sir Amyas Morse and has already brought forward his own strategic review that details how he wants the organisation to develop.

That review, published in February, was put together weeks before the true impact of coronavirus was realised.

But its main objectives – making a bigger impact on value for money, and sharing knowledge and learning quicker and more systematically – are still valid.

Mr Davies says he is ‘determined’ for the NAO to make a bigger impact on value for money and this is illustrated by a number of recent reports.

Just a few weeks ago the NAO warned of the risk that councils could underestimate the costs and complexity of ending PFI contracts.

Mr Davies cites this as an example of helping flag up an issue ahead of time to allow individual local authorities to prepare for the end of their PFI contracts.

Future-looking reports such as these will go alongside the more traditional auditor role of looking back at what’s happened already.

‘Both are necessary, Mr Davies insists.

‘On COVID-19 spending, for example, I think the public has a right to understand how that money’s been used.’

And it’s a lot of money - £124.3bn of programmes, initiatives and spending commitments in response to the pandemic to be precise.

Coronavirus has also forced the NAO to defer or cancel some of its work programme.

One of the casualties has been an inquiry into the effect of the Ministry of Housing, Communities and Local Government’s (MHCLG) shift towards one-off and short-term funding initiatives.

Instead, the NAO’s more general work on local government’s financial sustainability, which has become a regular fixture, is expected to continue amid growing concerns over funding and threats of Section 114s.

The s114 issued by Northamptonshire CC in 2018 brought the issue of financial sustainability into much sharper focus.

Mr Davies says there is now ‘much greater awareness’ of the risk that a council could effectively run out of money, but he points out that Northamptonshire’s auditor had reported their concerns at the time.

He suggests the issue was more that there were not the mechanisms in place for those worries to be picked up centrally.

‘I don’t think we can say we can be sure that it wouldn’t happen again but there is more monitoring in place,’ Mr Davies muses.

That said, Mr Davies, who spent 25 years at the Audit Commission before it was abolished by then local government secretary Eric Pickles, believes more Whitehall monitoring of local government is needed.

He agrees with a January 2019 report a few months before he joined the NAO that called on the Government to improve oversight and transparency over local authorities to ensure their financial sustainability.

Asked how MHCLG had responded to this criticism, Mr Davies confirms the department has acted but he believes it remains a ‘work in progress’.

Perhaps as part of this progressing work, MHCLG is reportedly proposing a league table to rank councils on specific categories, with sanctions for repeated worst performers.

As an Audit Commission veteran, Mr Davies acknowledges, with a wry smile, that this has ‘echoes of the past’.

He accepts the downside that league tables ‘can be misused’ and that performance indicators don’t always reflect the experience on the frontline, but believes this does not undermine their value completely.

Mr Davies uses the example of hospital league tables, which he admits led to ‘game-playing’. But he continues: ‘For all of that I don’t think it meant it was a wasted initiative or a bad idea in the first place. I think, used properly, performance data is a good thing. Transparency is a really valuable part of accountability and improvement.’

All of this performance infrastructure disappeared with the abolition of what many considered to be an overbearing Audit Commission but an increasing number of people are now wondering whether the sector has gone too far the other way.

‘There are risks in the local audit regime that weren’t there before,’ Mr Davies offers tactfully.

‘I don’t have a prescription but it needs addressing.’

The NAO is sure to keep a close eye on this and MHCLG’s oversight of the sector.

But while Mr Davies insists that the more autonomous the sector is the more robust it is, paradoxically, the NAO’s pressure on the department to keep on top of what’s going on raises questions about whether councils will ever truly be able to break free from the shackles of Whitehall.

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