Elliott Keck is Head of Campaigns for the Taxpayers’ Alliance.
Local government now spends well over £100 billion per year, almost five per cent of GDP and around ten per cent of total government expenditure. If it was a government department it would be the second largest. Almost all of its funding comes from taxpayers, whether through council tax, which now sits at over £2,000 per year for the average Band D household, or business rates or government grants. Given the enormous burden placed on household budgets by council tax and the hit to bottom lines from business rates, we deserve to know how these funds are being spent.
Except increasingly, we don’t. Under recent governments, there has been an admirable shift towards increased transparency in local government. Gordon Brown’s government made it compulsory to publish details on staff receiving over £50,000. Under the Local Government Transparency Code councils have to publish a whole series of datasets on their spending decisions. But while it’s been two steps forward, recently we’ve taken one giant step backwards.
Because new research from the TaxPayers’ Alliance has revealed that only a fraction of councils are filing their statements of accounts on time. The statement of accounts, an annual document, is the most complete picture of a council’s finances, and the health that they’re in. They show, among other things, what was spent, how it was spent, what revenues were brought in, what the council owes, what it is owed, and how its assets are fairing.
It’s where, for example, concerns about equal pay began cropping up for Birmingham Council, which began reporting issues on this as early as the late noughties. Town hall bosses there were just recently forced to issue a Section 114 notice as a result of the problem (an effective declaration of bankruptcy). It’s an example of where a council has not properly heeded warnings in its own financial statements. But at least the warnings were there.
Yet for the 2022/23 financial year, as more and more teeter on the brink, 97 local authorities have failed to publish even draft accounts. For the latest year, councils were given a 31st July deadline to publish a draft. Following this, there is a further deadline, this year on September 30th, for audited accounts when a final document is released with the accuracy of its financial reporting confirmed by a third party, the auditor. As part of this process, there is a public inspection period when electors are given the chance to review the accounts themselves, a small but important part of the democratic process. It’s their money, after all.
Along with the 97 that published nothing, 253 only published draft accounts, meaning just 31 published audited statements on time. These overdue reports make up a total of at least 658 over the past four financial years which still await publication.
That’s a worrying record. It means tens of billions of pounds of taxpayer’s cash has been spent unaudited, and in some cases undeclared.
Councils have their excuses, unsurprisingly. Delays to previous years audits, covid and “resource issues” are often cited. One councillor from the Local Government Association blamed auditors and called for a concerted response from “the Government, audit firms and regulators.” This doesn’t pass muster. While problems in the audit industry are well known, this does not explain the failure of 97 councils to even publish draft accounts for 2022/23, or the 37 who failed to publish anything for 2021/22, well over a year on from the deadline. They’re not waiting on auditors. They can publish drafts at any moment.
Two councils are instructive on this, Copeland and Lancaster. Copeland council hasn’t published accounts in any form since 2018/19. Lancaster council has only published draft accounts for the four relevant financial years. In the case of Copeland they’re open about their failure, citing significant changes to the accounts insisted on by their auditors. But that doesn’t explain the lack of any drafts. In the case of Lancaster they blame the appointed auditors for being “unable to resource the audit in a timely manner.” Does anyone really believe that the three year delay is explained by resourcing problems? Far more likely that there are unresolved issues with the accounts.
And then there is South Cambridgeshire, the council proudly at the forefront of the four-day week movement. The council likes to claim it has seen boosts to productivity and yet has not published audited accounts since 2019/20. Humiliation upon humiliation for town hall bosses in that hapless corner of local government.
So what can be done? At the moment the law is toothless. Councils simply have to publicly post a notification of delay and they can pirouette around the deadline. But as this problem mounts, more will need to be done. One option would be to impose a lower cap, or even a freeze, on council tax rises for councils who haven’t published at least draft accounts. After all, should they be asking for yet more cash from hard-pressed households when they won’t even say how they’re spending it?