Restore legal protections to monitoring officers, report on local government finances urges
Monitoring officers should have legal protections in order to help them challenge potentially risky financial decisions without fearing repercussions, a report on local government financial resilience has said.
The report, 'Present Tense: Renewing and Reforming Local Financial Governance Towards Long-Term Resilience and Sustainability', also called for monitoring officers to be given the necessary resources needed to carry out their duties.
Think tank Localis, which authored the report in partnership with external auditor Grant Thornton, identified three primary challenges pertaining to governance and oversight in local government.
These included the "erosion" of governance structures and capacity, "inadequate and unsustainable" funding models, and a "lack of local accountability, transparency, and public engagement."
To strengthen governance and scrutiny, the report suggested improvements such as better defining local government's role relative to central government, "reinvigorating" officer roles and organisational culture, addressing poor leadership, and boosting internal audit and whistleblowing procedures.
On statutory officer reform, the report said monitoring officers "too often face pressure to endorse potentially risky decisions".
It recommended restoring legal protections to monitoring officers to "empower them to speak truth to power" and "challenge such decisions without fear of repercussions".
It continued: "For instance, the Ministry of Housing, Communities, and Local Government (MHCLG) could reinstate previously eroded legal protections for statutory officers when exercising their powers and fulfilling duties to safeguard their council's financial interests."
The report also urged the Government to introduce a reinforced set of golden triangle responsibilities, with assurances of competence, professionalism, and integral membership of local authority senior management teams.
It said that these responsibilities could help enable officers to offer timely advice, challenge proposals, and ensure financial and legal considerations are embedded in wider council decision-making.
The report also called for a recommitment to the seven principles of public life, also known as the Nolan Principles.
Such a recommitment could help tackle the current climate where a "broader organisational culture that embraces challenge and criticism, values diverse perspectives, holds leaders accountable, and is proliferated organisation-wide […] has unfortunately become increasingly scarce", the report said.
The report meanwhile warned that the "increasing reliance on interim statutory officers has undermined effective leadership and management".
It said this has resulted in gaps in corporate memory and a lack of understanding of a local authority's decision-making history.
Interim officers also find it difficult to challenge decisions due to a lack of close senior working relationships or perceived organisational gravitas, it noted.
In addition, the report suggested that S151 officers and monitoring officers have also been weakened in instances where they are "increasingly excluded from senior management teams", limiting their capacity to track financial decision-making or intervene effectively.
Elsewhere, the report criticised weakened audits and the "inconsistent" application of governance standards across councils.
The report added: "The inconsistent application of governance standards across councils has been exacerbated by the weakening of internal controls and oversight functions.
"Local government has experienced a decline in robust internal accountability due to cuts in back-office functions like finance and legal services, which serve as a crucial safety net for governance.
"This inconsistency allows for governance failures or high-risk decision-making to go unchecked, as many councils lack either the capacity or the will to apply governance processes uniformly, resulting in systemic governance issues that remain unresolved."
Commenting on the report, Localis senior researcher, Callin McLinden, said: "Our report, Present Tense, reveals an alarming erosion of governance capacity, undermining councils' ability to manage finances, oversee contracts, and plan effectively.
"It calls for urgent reform to create a more accountable, transport, and sustainable system of local government finance that empowers councils to deliver for their communities.
"Collaboration between the Government and local authorities will prove absolutely vital to rebuilding trust and ensuring resilient local finances in the long-term."
Guy Clifton, Local Government Value for Money Director, Grant Thornton UK, added: "As auditors of local government we recognise the diagnoses set out in this report.
"Whilst high profile governance failures at some councils should not reflect on the sector as a whole, these failures are a symptom of the need to renew the system of governance.
"The report provides an important contribution to the changes needed to improve decision making, scrutiny and the stewardship of public finances nationally."
Adam Carey
