Effective governance key priority for local government to tackle resource pressures and changing delivery models

28 February 2013 – 

Grant Thornton UK LLP has today published its annual review of governance in local government in England. The Local Government Governance Review 2013 examines the challenges that public sector faces around governance, both internally and externally, in light of sustained budgetary pressures and shifting government policy.  

The report finds the average number of significant governance issues reported per council is 5.2 for 2011/12, an increase from 4.3 the previous year, reflective of a more challenging operating environment. The most common governance issues raised by councils include the impact of national government policies and working with others to deliver services.

The study identifies the challenges to governance, and highlights steps that councils can take to ensure clear governance as they adapt to dramatic changes in the way services are funded and delivered. In addition, the report also emphasises the importance of people, culture and behaviour – including the tone from the top – in ensuring effective governance.

Commenting on the report’s findings, Paul Hughes, Director and Public Sector Governance Lead at Grant Thornton UK LLP, said: “Good governance supports council leaders in making the correct decisions, reduces the likelihood of things going wrong and protects them if problems do arise. While our findings suggest there is more councils can do to embed successful governance processes, encouraging progress has been made.

When considering how to improve governance, councils need to think wider than systems and processes and build a culture supportive of good governance. This is essential for embedding effective governance frameworks whilst focusing limited resources on the greatest areas of risk."

Using survey data from local government leaders and desk-top analysis of annual accounts and published documents the review found that the majority of respondents believe the chief executive role is the top post for driving governance, followed by the monitoring officer, S151 officer and head of audit. This is reflected in the development mechanisms for officers, with 82% agreeing that they have ‘robust arrangements’ in place to build this capacity and capability.

However, despite the pivotal leadership role council members can also play in governance, one third of survey respondents (33%) said they didn’t feel they had such robust development arrangements available for members.

Although an established component of the democratic framework across the sector, a significant proportion of respondents (40%) didn’t feel that their scrutiny function was able to annually demonstrate the value it adds. In addition, 27% felt their scrutiny function wasn’t able to effectively respond to the changing risks the council faces. Some councils, however, are making the best of tightening scrutiny resource by focusing more on strategically important issues.

At a time when more councils are looking to alternative models of service provision, a significant minority of respondents (21%) lack confidence over the clarity of roles and responsibilities when working in partnership with others, up from 11% last year.

"Increasingly, in a resource constrained environment, councils will need to focus on getting more for less from their governance arrangements. They will also need to meet the challenge of implementing robust and proportionate governance arrangements for new service delivery models to retain accountability without stifling innovation." said Hughes.

The report sets out a number of suggestions for improving governance culture, promoting effective audit committees, scrutiny and risk management.

The Grant Thornton Local Government Governance Review 2013 is based on the analysis of the annual governance statements and explanatory forewords of 153 county, borough and unitary councils in England. The research is supplemented by a survey of council leaders, made up of 64 senior council officers and members, looking at their response to questions on governance reporting and supporting governance processes.

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