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Council spending 'lacks scrutiny'

MPs have expressed concerns that insufficient scrutiny is being given to how local councils spend billions of pounds of taxpayers' money.

The Commons Public Accounts Committee (PAC) said too much reliance was placed on the oversight of councillors who "may not have sufficient capacity" to do the job thoroughly.

And hopes that an army of "armchair auditors" would step in to use data published under a new openness regime had been thwarted by the failure to present the information in a useful way.

Local authorities have been handed increased control over what they do with the £36.1 billion they are provided with each year in grants from Whitehall - which accounts for around 70% of their income.

But the body which previously oversaw spending - the Audit Commission - is being abolished by the Government and the PAC warned that more needed to be done to ensure value for money for the taxpayer.

In a report it also said there was a "particular gap in assurance" over £2.8 billion of grants which Whitehall expected to be devoted to particular areas such as welfare and transport but failed to check that it was being.

"The grant-giving departments cannot know if local authorities used this funding in line with the grant objectives, whether the funding is achieving the outcomes that it intended or whether it is achieving value for money," it alleged.

PAC chairwoman Margaret Hodge said: "The Government believes that the best way to ensure that councils spend our money wisely is to rely on local residents and councillors to provide scrutiny.

"However, there is no convincing evidence that 'armchair auditor' members of the public are being empowered to hold local authorities to account for how they spend the £36.1 billion in funding they receive every year.

"Councillors do not always have the skills or time to fulfil this role, which involves scrutinising the delivery of complex services such as adult social care provision.

"If this system of local accountability is to work effectively, residents and councillors must have access to relevant and comprehensible information.

"Yet while local authorities are required to publish data such as expenditure over £500, senior salaries and land holdings and building assets, this data is presented in a way which does not make for easy and effective scrutiny by the public."

The Department for Communities and Local Government (DCLG) was also accused of being overly reliant on service user surveys.

"These surveys are certainly not intended for that purpose and are unlikely to assess value for money," the committee found.

Criticisms of the way data is presented was also made in a report by the Commons select committee which directly scrutinises the work of DCLG.

It raised concerns as part of a warning to authorities against a return to spiralling pay for senior officers as the economy recovers.

The MPs said the recession had effectively halted an unacceptable rise in the decade to 2010 which saw chief executive salaries soar by 75%.

But there appeared to have been no adverse effect on services suggesting councils could continue to recruit talented individuals at that pay grade.

Their report said differences in the reporting of pay decisions between councils made it hard to compare and called on the Local Government Association to collate and produce user-friendly data.

It also criticised a lack of adequate staff appraisals to ensure bonuses were justified and said all significant pay-offs awarded to senior staff - and the reasoning behind them - should be published within one month.

Jonathan Isaby, chief executive of the TaxPayers' Alliance group, which campaigns for lower taxes, said: " When rank-and-file council staff have seen their pay frozen, it is downright immoral for town hall tycoons to enjoy salaries entirely detached from financial reality.

"Though recent pay restraint is welcome, there are still more than 2,000 council staff on taxpayer-funded six-figure salaries, and that number must come down.

"The committee is right that councils must do a better job of appraising senior staff and ensuring poor performance isn't rewarded. It is right, too, that taxpayers are informed when generous golden goodbyes are handed out and the reasons for them."

Local Government Minister Kris Hopkins said: "We make no apologies for scrapping the last administration's avalanche of targets, top-down blanket inspection and micro-management of local government.

"This has freed councils from the shackles of Whitehall control and reduced the reporting burdens on councils as the NAO report into this has recognised.

"We have ushered in a new era of greater local transparency and accountability including requirements for councils to publish all spending over £500 and rights for residents to inspect the books, as well as opening up council meetings to greater public scrutiny and giving the public a final say on council tax rises through a local referendum.

"However, robust auditing remains in place and a more accountable and efficient way of holding local councils to account is being created through the Local Audit and Accountability Act.

"Reserve powers remain to conduct targeted inspections where there is an overwhelming public interest, as, for example, are currently taking place in Rotherham and Tower Hamlets."

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