Speeches by Davies.

“It really lends itself to solving a one-off problem. For example, for essentially bailing an authority whose underlying annual finances are in reasonable shape out of a failed investment, this is a solution that can make some sense. We are now seeing authorities having to participate in this exceptional financial suppo…”

“We cannot know, of course, so we cannot give you an authoritative NAO view on the answer to that. There are obviously lots of reasons to think that there were advantages in what was being proposed; we just cannot say what would have happened. Abdool, you might want to answer that.”

“That is a forward-looking policy question that we are not able to give a view on. Clearly, we will audit the outcome of the new system and provide the same sort of evidence as we have in this report on how it plays out in practice. The key thing here is growth, which of course is the national challenge as well for fund…”

“I was very careful not to say it is extra funding; it is certainly not our job to recommend that to Government because where do you stop? There are challenges and spending pressures across every Department. I suppose what I was getting at is not leaving local government with an insoluble problem is the issue, and only …”

“First, as Abdool mentioned earlier on, it requires a policy solution to unsustainable areas of financial demand on local authorities. SEND is one where we have reported separately, and the Public Accounts Committee held an inquiry on that report. Our conclusion was that this is just a financially unsustainable regime t…”

“Not with 42 authorities involved, no.”

“In the previous couple of Parliaments, local government showed the way on delivering costs reductions while trying to minimise the impact on services, very significant headcount and funding reductions over a long period in the 2010s. There is still a lot of expertise in local government on how to close these gaps. Of c…”

“We did calculate that in the last Parliament, and it was many tens, but we have not done an up-to-date version of that in this report.”

“I do not have the details to hand, but we have identified exactly that problem of the amounts just being too small to justify that kind of approach, as well as the fact that they are coming from different Departments with precious little co-ordination in many cases. Of course, Government have had several attempts to tr…”

“As Abdool said, we do not give policy advice to Government; we audit the value for money of the results of policies, essentially. That is our role. You are right; I am not suggesting that there is an easy answer that is always correct for every circumstance, but I would say that we have definitely seen too much use of …”

“In our report, one recommendation in arriving at this better approach for the future is that, first, there is a cross-government element to this. Abdool has already mentioned that a lot of the solutions lie with individual Government Departments, not just MHCLG, so any solution to this needs to be a cross-government so…”

“It has been the long-standing practice of all Governments to use capital essentially to solve what is really a revenue problem. It is very poor accounting practice, but you can understand why, practically, that appears to be the easiest solution for a Government with limited resources. Successive Governments have used …”

“The overall capital picture set out in our report is flat and has actually been going down slightly in real terms over the last few years. Given the demand for not just housing but other infrastructure, that available capital resource has been under real strain in recent years.”

“It depends on the source of demand; some predates the pandemic very significantly, but Vicky, you might want to say more about that.”

“Shall I kick off with some headlines and then maybe bring in Vicky and Abdool? Our recent report where we take stock of the changes to local government finance in the last six or seven years shows that the situation has become more strained over that time. In contrast with the previous period, funding has increased but…”

“Good morning. I am Gareth Davies, the Comptroller and Auditor General at the NAO.”

“It is clearly in regulations rather than in primary legislation. For many decades, that system worked perfectly fine, so I do not think it is the lack of a stronger date in legislation that is the issue; it is getting more robust arrangements in place in the way that is now intended. For many years, you could count the…”

“These things should not happen, and it is extremely unusual that we have had such a cluster of these across several authorities in a few years. But once they have happened, people are going to have to just recognise reality with this. There is a moral hazard here essentially of councillors spending money they do not ha…”

“It is coming down now because the Government have essentially implemented this backstop solution, which has required all councils and their auditors to publish audited accounts by a certain deadline. That is now steadily clearing this backlog of old years. A pretty high price has been paid, though, because in order to …”

“For Members’ information, I worked at the Audit Commission for a long time and audited local government for many years, up to about 2012. The fact that we have had significant financial failures in local government is in part due to the weakening of the local audit regime in recent years. It certainly was not perfect b…”