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MPs call for end to competitive bidding for local authority funding

Author: ICAEW Insights

Published: 16 Nov 2022

A major report by the Public and Constitutional Affairs Committee describes governance and funding arrangements for local government in England “ineffective”.

A two-year government inquiry has highlighted “serious problems” with current governance arrangements in England and is calling for “significant reform”.

The report by the House of Commons Public and Constitutional Affairs Committee (PACAC) contains six main findings: it warns that governance structures are too complex; there is overcentralisation of decision making; and the public do not understand the governance structures or where accountability lies.

Meanwhile, it criticises funding arrangements for local government as ineffective; it warns that people in England do not believe they are listened to; and says that to tackle geographical inequality, the government needs to shift its focus from metropolitan areas to rural and coastal ones.

While it praises the government’s Levelling Up White Paper for identifying many of the issues, it states that it will not be sufficient to address the problems with England’s governance arrangements and argues that the six issues must be addressed for the proposals in the Levelling Up White Paper to have a significant impact.

The inquiry considered the obstacles to reform and concluded that the main obstacle was not disagreement over the need for reform, but disagreement about what that reform should look like. They call for a cross-party commission accountable to Parliament to develop proposals for the governance of England. 

PACAC Chair William Wragg MP said an overhaul of governance arrangements was urgently needed to empower local decision-making and restore public faith in accountable local governance. 

“It is important that such long-term, fundamental reforms are not controlled by any one party. That is why we are calling on the government and the opposition to set up a cross-party commission to develop proposals for sustainable and durable governance arrangements for England,” Wragg said.

One area the report explores in detail is local government funding, which it describes as “deeply problematic”. It highlights the current process, where local authorities are forced to prepare bids for a wide variety of different short-term funding pots, concluding that it wastes the time and resources of both local and central government. The committee is calling for a clear commitment from the government to end this practice. 

This echoes a point made by ICAEW in response to a recent government call for evidence on the UK’s transition to net zero, which states that local authorities’ ability to contribute to the UK’s transition to net zero is held back by their requirement to bid for various short-term pots of funding. ICAEW is calling for multi-year funding settlements that enable local authorities to support the net-zero projects that will make the most difference in their areas.

Oliver Simms, ICAEW’s Manager for Public Sector Audit and Assurance, said: “The report Governing England has raised important issues about governance and local authority funding arrangements in England. We agree with its call for an end to the wasteful practice of requiring local authorities to bid against each other for funds.

“Public sector governance is in the spotlight following COVID-19, recent political turmoil and some high-profile financial management failures. We look forward to discussing the issues, including those raised by the report, and what we can do to make a difference at the free ICAEW Public Sector Conference on 9 December.”

ICAEW’s virtual Public Sector Conference 2022, focussing on good governance and risk management, will take place on 9 December. For more information and to sign up for free, go to ICAEW’s dedicated Public Sector Conference page.

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