Local Government: Accountability and Oversight

Our fourth and final episode on local government discovers how local government in England is held accountable. Councils answer to both their local voters and the central government. They are financially independent with their own assets and ability to borrow. Central oversight comes through the Department for Levelling Up, Housing and Communities (DLUHC) and designated Accounting Officers, who are personally responsible for public funds. This system uses financial rules, audits, and transparency to ensure councils spend money prudently. The government can intervene if a council fails its Best Value duty.

Key Takeaways:

• English local authorities are accountable locally to voters and centrally to government departments like DLUHC.
• Councils are financially independent but must follow statutory financial codes and rules.
• Every council has an Accounting Officer personally accountable for public funds, often to Parliament.
• Central government collects various data to get assurance about local spending and services.
• Important financial rules include guidance on treasury management, investments, minimum revenue provision (MRP), and borrowing limits under the Prudential Code.
• Councils have a Best Value duty to continuously improve services efficiently.
• The government can legally intervene if a council is failing its Best Value duty.
• OFLOG was established to publish performance data but is being closed.

Important Definitions & Concepts:

• Accounting Officer: A senior official (often the Chief Executive) in a local authority personally accountable to Parliament (usually via the Public Accounts Committee) for the use of public funds.
• Best Value Duty: A legal requirement for principal local authorities in England to continuously improve how they perform their functions, considering economy, efficiency, and effectiveness.
• Prudential Code: A code that provides guidance on borrowing and managing capital finance for local authorities, including setting limits.

Source:  Local government in England: structures
Research Briefing
Published Tuesday, 22 April, 2025

Transcript

Amy: 0:00

Hello and welcome to The Bench Report. You're listening to Amy and Ivan. Today, our fourth and final episode on English local government explores their accountability.

Ivan: 0:13

That's it. We're looking at how councils are actually held responsible for their actions, for the money they spend.

Amy: 0:20

Which is something I think listeners are keen to understand. So how does it work? How are they held responsible?

Ivan: 0:26

Well, it operates on two main levels, really. Two levels. Yes. First, you've got the local Democratic accountability. That's you, the voter.

Amy: 0:33

Ah, so the ballot box is the first check.

Ivan: 0:36

Precisely. You hold them accountable for services, for financial management. Councils are, after all, independent bodies.

Amy: 0:43

Independent, meaning they manage their own affairs.

Ivan: 0:46

Largely, yes. They're legally responsible for their finances, their assets, any borrowing, their reserves. Central government generally tries to keep its distance.

Amy: 0:55

Tries to, but they can step in.

Ivan: 0:57

Oh, absolutely. If there are serious failures, central government does have powers to intervene. But day to day, it's local responsibility.

Amy: 1:05

Okay, so that's the local level. What's the second level.

Ivan: 1:07

That's the central government oversight, mainly through the Department for Leveling Up Housing and Communities, DLUHC. DLUHC. Right. They have something called a local government accountability framework.

Amy: 1:18

A framework. And how does that connect sort of national politics to local spending?

Ivan: 1:24

It's part of DLUHC's broader accountability system. Essentially, the permanent secretary at DLUHC is accountable to parliament for all the department spending.

Amy: 1:33

Including the funds that go down to local councils.

Ivan: 1:35

Exactly. So This framework links local spending back up that chain of accountability.

Amy: 1:41

Interesting. Who are the key people involved in this locally?

Ivan: 1:44

A really crucial role is the accounting officer within each council.

Amy: 1:49

Who is that usually?

Ivan: 1:50

Typically the chief executive. And they have personal accountability to parliament.

Amy: 1:55

Personal. For how all the public money is used.

Ivan: 1:57

Yes. It's quite a significant responsibility. Preparing the accounts for scrutiny is a big part of that.

Amy: 2:03

And DLUHC oversees this whole system.

Ivan: 2:05

Well, the principal accounting officer at DLUHC has a duty to ensure the overall local governance system has the right checks and balances in place. It's about system health.

Amy: 2:16

So this framework DLUHC uses, what are its core parts? What does it actually look for?

Ivan: 2:21

It focuses on several key dimensions. First, clarity. Who's responsible for the resources?

Amy: 2:28

Makes sense. Clear roles. What else?

Ivan: 2:30

Then there is statutory codes and rules. National guidelines setting out how councils must manage money prudently.

Amy: 2:36

Oh, prudent spending. Essential.

Ivan: 2:38

Absolutely. Third, you need checks and balances. Things like internal audit, external audit, whistleblowing procedures, both inside the council and from outside eyes.

Amy: 2:46

Internal and external checks. Got it.

Ivan: 2:48

Fourth is transparency. Publishing data, being open about finances and performance.

Amy: 2:53

So people can see what's happening.

Ivan: 2:54

Exactly. And finally, strategies to tackle fraud. Proactive measures.

Amy: 2:58

Okay. Clarity, rules, checks, transparency, and anti-fraud. That seems comprehensive. How does DLUHC actually monitor all this? Where do they get their information?

Ivan: 3:08

They pull information from various places. Financial data returns from councils, obviously. Information on service provision.

Amy: 3:16

Hard data.

Ivan: 3:17

Yes. But also what they call soft intelligence.

Amy: 3:20

Yeah.

Ivan: 3:20

Sort of whispers on the ground, conversations, input from the local government association, the LGA.

Amy: 3:26

So formal data and informal intelligence.

Ivan: 3:29

And input from other government departments too. Plus they keep an eye on media reporting. It's a mix.

Amy: 3:36

You mentioned statutory codes and rules earlier. Could you give some examples?

Ivan: 3:41

Sure. There's specific guidance on treasury management, how councils handle their investments. That often refers to a code from CIPFA, the accountancy body.

Amy: 3:51

CIPFA. Okay.

Ivan: 3:52

There's also guidance on other types of local government investments like deposits or assets and rules around minimum revenue provision or MRP.

Amy: 4:01

MRP. What's that?

Ivan: 4:02

That's about setting aside money each year to repay debt, making sure borrowing is sustainable long term. And those rules are actually being updated with new requirements coming in from 2021 Keeping

Amy: 4:11

things current. Any other major rules?

Ivan: 4:14

A very important one is the Prudential Code, also from CIPFA. This governs the council's overall approach to borrowing and capital finance.

Amy: 4:22

So how much they can borrow, essentially.

Ivan: 4:25

And how they manage that borrowing and their capital spending plans. It's all about ensuring affordability and prudence, preventing councils from getting into deep financial trouble through borrowing.

Amy: 4:36

Beyond the financial rules, is there anything about the quality of services?

Ivan: 4:39

Yes. There's the best value duty. It requires councils to make arrangements for continuous improvement.

Amy: 4:45

Continuous improvement. In what sense?

Ivan: 4:47

Across economy, efficiency, and effectiveness. Basically, getting the best possible service within the resources available.

Amy: 4:54

Did they get regularly checked on this?

Ivan: 4:56

Well, the system of regular external assessments for best value was stopped some time ago.

Amy: 5:01

Oh. So how is it enforced?

Ivan: 5:04

The duty still exists, and the government can intervene if it believes a council is failing to meet its best value duty.

Amy: 5:11

So they can still step in, even without regular checks?

Ivan: 5:14

Yes. The Secretary of State can assess compliance and might commission a specific best value report before intervening, but that report isn't actually a legal requirement before they act.

Amy: 5:25

Okay. Now, I remember hearing about a new body, OFLOG, the Office for Local Government. Where did that fit in?

Ivan: 5:33

Ah, yes. OFLOG. The idea behind it was primarily about data and comparison.

Amy: 5:38

Publishing data so you could compare councils?

Ivan: 5:40

Exactly. Compare performance, identify areas that might be at risk, and share good practice. Help councils learn from each other.

Amy: 5:48

So more about transparency and early warning.

Ivan: 5:51

That was the intention. Crucially, it was not set up to be the body that made decisions about government intervention.

Amy: 5:56

Not an enforcement body, then?

Ivan: 5:57

No. And interestingly, its future is, well, short-lived. The Labor government announced in December 2024 that OVLOG would be closed down.

Amy: 6:06

Closed already. Why?

Ivan: 6:07

The reasoning given was concerns about a, perhaps, vague remit and potential duplication with other bodies. Its role wasn't seen as clear enough.

Amy: 6:16

So accountability remains an evolving picture, then?

Ivan: 6:19

Very much so. The structures and oversight mechanisms Mechanisms do change over time.

Amy: 6:24

As always, find us on social media at Bench Report UK. Get in touch with any topic important to you.

Ivan: 6:29

Remember, politics is everyone's business. Take care.