REPORT: Local Audit: Why Public Interest needs to count

Local government in the UK is in a state of deep crisis. Shrinking of the state, centralisation of power and the hollowing out of the local state have decimated the sector. Local audit should be one of the central accountability mechanisms in a well-functioning democracy, but it is not working. 

Current audit arrangements in England are failing to provide oversight and scrutiny at a time when it is particularly essential. Private interests overshadow public interests, the capacity for scrutiny and challenge at all levels has been reduced, and there is less openness and transparency in local government and audit since the abolition of the Audit Commission in 2015. These conditions are effectively excluding the public and wider civil society from holding power to account.

Our report Local Audit: Why Public Interest needs to count argues that audit should be treated as an exercise conducted in the public interest and for the public good. Following on from our previous research for action around audit and accountability, this report analyses local audit from a standpoint that is explicitly political, and demands not only long-overdue audit reforms but a redefinition of how audit is conceived and practised. We argue that public interest is central to this transformation.

We have formed six principles that we believe should underpin public interest in the context of audit and accountability in local government.

They are: 

Accountability starts with transparency.
Disclosure of all relevant information is crucial. For example, council-owned companies should be subject to audit.

Robust scrutiny and challenge encouraged
Supporting and valuing scrutiny means funding and resourcing it well – for example, as well as being made statutory full committees, local government audit committees should have remit and extra resources to oversee corruption risk assessments and investigative powers.

Powerful regulation improves governance
An accountable local audit regime requires regulation where standards and expectations in public life are both clear and clearly enforced. In practice, a national audit and reporting body (the planned Audit, Reporting and Governance Authority, or ARGA) needs to have capacity to collect nationwide data on fraud and corruption.

Public Interests over conflicts of interest
The privatisation of audit provision has undermined the ‘public’ nature of audit as a public good. One remedy for this would be that public audit should not be carried out by the private sector.

Protection of public resource is central to local government
All local government goods and services should be considered the property of the public, for the purpose of the public good and wellbeing. For audit this means, for example, forming an independent national body with a remit on the same level as the Audit Commission for carrying out regular investigations on cross-cutting issues.

Accountability needs public engagement
In our view, this is the most important part. It is necessary to have a wide range of civil society actors and councillors from all parties actively encouraged and able to participate in audit and scrutiny, thus making it better and more valid. One way this could be enlarged is through the formation of Regional Public Accounts Committees.

 

There are many more recommendations in the report; and although there is little appetite in the current Government for taking strong measures to redefine (or even reform) audit, more and more people are seeing the importance of taking local government accountability seriously and protecting and enlarging our democratic relationship to public resources for the public good.

We had an online event about local audit on 16th August 2023 – you can watch it here

Here is the report: