Preventing Failure in Local Government

Local government is in the news again and for all the wrong reasons. Nottingham City Council are the latest authority to issue a Section 114 notice, and there are reports that almost 1 in 5 council leaders and Chief Executives may declare bankruptcy this year or next. Though most local authorities are well led and remain able to balance their books through turbulent times, it is an unfortunate truth that catastrophic failure is no longer the rare occurrence that it once was.  

In this climate, Grant Thornton in partnership with Lawyers in Local Government, the Association of Local Authority Treasurers Societies, SOLACE and CIPFA have produced a comprehensive report on “Preventing failure in local government”. Drawing upon experience of Value for Money Audits as well as a variety of other sources, the report explores the internal and external causes of failure, the lessons learned from past failures, and the reasons why existing safeguards are not operating effectively. The report goes on to consider where there are opportunities for us all to prevent failure, mitigate against potential risks and enact meaningful change.  

"The report eloquently demonstrates the importance of culture and leadership in preventing failure. Such things are complex and hard to measure, but easy to see. It validates our concerns with respect to the changing role of the monitoring officer.  Evidence shows it is a clear red flag if the monitoring officer does not have a seat at the top table, is not legally qualified, and is not central to discussions and decision making. We will be using the findings as a springboard to develop a better way of working and support our drive for legal reform."   

-Deborah Evans, LLG CEO 

"Whilst we hope this report assists the sector in ensuring good governance and reducing the risk of financial crisis, the truth is that without meaningful changes - from the modernisation of local authority legislation, cultural improvements and sanctions, through to addressing recruitment and retention challenges, statutory officer support and financial investment from government, we will continue to see the number of failing councils rise. We have the opportunity now, in a sector absolutely ready to unite, to make those changes within our own gift, and influence those at national level, to ensure that councils can support their local communities at a time where the numbers of vulnerable people are rising".  

-Helen McGrath, LLG's Executive Director for Policy and Governance 

The full report: “Preventing failure in local government” is available here: https://www.grantthornton.co.uk/insights/how-can-further-local-authority-failures-be-prevented/ 

Grant Thornton plan to publish a second report in early 2024 which will provide a further consideration of actions that councils can take to prevent failure, including case studies