Spending watchdog urges mayoral strategic authorities to ensure local accountability

In a report titled Devolution in England, the independent public spending watchdog also reported that some MSAs described a pressing need to build institutional capacity, in particular to manage legal functions, human resources, and finances as new responsibilities are layered on to existing ones.

The report examined whether the Ministry of Housing, Communities and Local Government (MHCLG) is successfully implementing devolved arrangements, with a particular focus on funding and accountability.

It found that stakeholders regard the Government's introduction of Integrated Settlement funding as a "significant step forward", enabling MSAs to become "more creative and to think in a longer-term way about the programmes they deliver".

According to the report, the new funding arrangements have the potential to deliver better value for money as they are rolled out more widely.

However, the NAO found that the reporting burden on MSAs to demonstrate how much of their Integrated Settlement funding has been spent "is currently greater than initially envisaged".

"The way the current framework will address underperformance has not yet been tested," the report added.

As more MSAs are brought into the system, the NAO said there are questions over whether both local and central government will have sufficient capacity to support negotiations over Integrated Settlements and Outcomes Frameworks.

It also warned that authorities receiving integrated settlements in future may not have the same level of maturity or capability as the first wave of MSAs, noting that managing an Integrated Settlement "places different demands on MSAs and constituent authorities from those associated with deals-based funding".

The report meanwhile said strengthened local scrutiny arrangements will be essential to ensuring effective accountability as MSAs take on greater responsibilities and larger funding allocations.

It also identified a "clear tension" between government departments' accountability requirements and the ambition set out in the English Devolution White Paper to replace centralised oversight with "locally accountable autonomy".

"This tension will need to be resolved, and local accountability arrangements substantially strengthened and tested, before the devolution of funding and accountability can be considered to be working effectively to support improved outcomes for local people," the report said.

Among its recommendations, the NAO called on MHCLG to provide further detail in regulations and statutory guidance on Local Scrutiny Committees, including their membership requirements, powers and ways of working.

It also urged the department to actively manage the risks and opportunities involved in expanding the integrated settlement model as both established and newer MSAs join the system.

The NAO also made several recommendations for MSAs. It said authorities should ensure they have robust arrangements to support effective local accountability and transparency, including making appropriate use of the work of their appointed external auditors.

It also recommended that MSAs develop a strong evidence base to support timely negotiations on Outcomes Frameworks and bids for additional powers or funding.

Finally, the report said MSAs should continue to work with MHCLG and one another to build their capacity and capability, particularly in relation to fiscal devolution.

Gareth Davies, head of the NAO said: “MHCLG has done well so far in implementing its plans to set up Mayoral Strategic Authorities. The Integrated Settlement arrangements give welcome flexibility to dedicate spending where it is needed most.

“MHCLG should now ensure that the system through which Mayoral Strategic Authorities are accountable to central government is proportionate and supported by strengthened local accountability arrangements.”

Adam Carey