Improving scrutiny rated top priority for council governance, says research

Improving scrutiny is rated as the top priority for council governance, Grant Thornton’s Local Government Governance Review 2012 has revealed.

More than a third of the 120 senior officers and members who responded to the firm’s survey said their council’s scrutiny function was not effective in responding to changing risks and could not demonstrate its value.

In its report, Grant Thornton said: “Councils need to ensure that their scrutiny functions are effective in holding senior officers to account and improving policy making.

“But investment will be required, particularly in the training and development of scrutiny committee members.”

The research revealed that respondents had high confidence in their council’s risk management arrangements, with 98% agreeing they were effective at identifying key strategic risks and 96% believing they were effectively managed. However, it also showed governance to be under pressure from funding constraints.

Grant Thornton suggested that councils would have to work harder to make their risk management arrangements lean and dynamic.

“This is likely to mean rethinking their idea of tolerable risk, adopting an ‘opportunity risk management’ approach and making a significant culture shift,” it said.

The survey for the Local Government Governance Review 2012 meanwhile found that more than one in five respondents (22%) considered that their council’s standards committee was not effectively responding to ethical issues facing the council and could not annually demonstrate the value it added.

Chief executives were more likely to have a negative view of the standards committee than directors of finance.

The report also revealed that:

• Councils are feeling the pressure in people development, with one in five respondents saying they did not believe their councils had robust enough systems to develop the capacity and capability of officers and members;
• Women occupy nearly 30% of cabinet positions, which compares favourably with the private sector but is lower than in the NHS;
• Around 80% of councils carry out annual governance reviews. But Grant Thornton said: “Experience and anecdotal evidence suggest these reviews are more compliance driven than seeking to emulate best practice”;
• Audit committees were considered one of the top three strengths of governance. “There was a strong view that audit committees are responding effectively to changing risks and adding value”;
• Respondents were, on the whole, positive about partnership working, with 89% saying they were clear about the respective roles. However, Grant Thornton suggested that councils might be underestimating the governance challenge that working together presents;
• More than 90% of respondents said their council was aware of, and had responded to, the heightened risk of fraud and corruption in the current economic climate;
• Over a third of respondents said they did not find their council’s annual accounts helpful in explaining its financial position.

Grant Thornton suggested that there was a strong case for all councils to publish a consolidated annual report.

It said annual reports could engage the public and other stakeholders by providing the information to enhance accountability and transparency in, for example: stewardship of scarce resources; governance effectiveness; and operational performance.

Philip Hoult