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Golden triangle or gilded cage?

Paul Feild asks whether the 2024 Code of Practice on Good Governance for Local Authority Statutory Officers will put monitoring officers in a difficult position, if the role is inadequately resourced and with a low status.

Last month Solace, CIPFA and LLG jointly published a guidance document for working together for the object of “securing superior governance in local government”. It’s called the Code of Practice on Good Governance for Local Authority Statutory Officers (the ‘Code’).

This paper provides a critical review from the stance of a local authority lawyer as befitting this publication. What I argue is this Code places a great deal of onerous obligations on the Monitoring Officer, without a proper consideration as to how they are going to deal with it. The net of future corporate governance failure blame is being cast widely.

The Code

The Code starts with a brief summary of the statutory officers’ roles (sections 4 and 5 of the Local Government and Housing Act 1989 (LGHA) and section 151 of the Local Government Act 1972 (Chief Finance Officer ‘CFO’) and section 113 of the Local Government Finance Act 1988).

The ‘Nolan Principles’ are then repeated followed by text on the ‘Golden Triangle’. Where the Golden Triangle comes from is not explained, though the origin seems to be from the LLG. I don’t know what ‘Golden’[i] has to do with as it but assume it symbolises an ambition that the three statutory governance officers are some kind of magical triumvirate force all pulling in the same direction.

The Code says:

The statutory officers are expected to advise clearly with impartiality and integrity. This can mean delivering challenging messages which makes it more important the three work closely together to connect properly with key stakeholders across the authority. For this reason, they are often referred to collectively as the governance ‘golden triangle’.

Like the Nolan Principles there are seven ‘Golden Triangle Standards’ being:

  1. Respect Roles & Responsibilities
  2. Act Wisely: A duty of enquiry & the exercise of statutory functions
  3. Be Robust in working arrangements
  4. Resource up: Get the tools to do the job
  5. Build Resilience: Appointing Deputies
  6. Champion good decision making
  7. Effective Oversight: External companies and entities of the authority

Excessive demands on the Monitoring Officer?

To have a Code settling understandings and a commitment to a coherent structure to governance is a good thing. It is nice to see a joint effort between the various organisations of Solace, CIPFA and LLG’s policy thinkers to define some maxims of governance with some kind help from the private sector, but while recognising its objectives, it is detached from hard reality of the question of where are the resources for the Monitoring Officer to enable success in their newly defined broader governance role?

Firstly, the Chief Executive can call on the might of the whole council, and the Director of Finance a complete department all about the numbers, but what about the Monitoring Officer - they get a deputy???

Secondly, consider the pecking order. By statutory definition the Chief Executive is Head of the Paid Service, and the s.151 is a chief officer. But the Monitoring Officer may not even be a JNC[ii] chief officer. Very often they are likely to be a Head of Legal Service and answerable to a chief officer. If that is the Chief Executive that looks fine, however in some cases as head of legal they may be line managed by the S.151 Officer as a Chief Operating Officer with a ‘dotted line’ to the Chief Executive. This is all very well, unless the S.151 Officer is part of the governance problem. Whilst finance is accountancy it is also much about law. Thus the Monitoring Officer can get drawn into the world of advising on the legality of financial decision making.

I wrote last year on the subject of the Monitoring Officer[iii], and reiterated unlike the Chief Finance Officer there is no requirement for the Monitoring Officer to be professionally qualified, ideally as a lawyer. The lack of being professionally qualified is true too for the Chief Executive, but the responsibility for legality of the actions of the local authority is placed with the Monitoring Officer. Contrast this with section 113 Local Government Finance Act 1988 which says the Chief Finance Officer (S.151) must be a qualified accountant. It would be better if our ‘Golden Triangle’ Code indicated this as a preference that the Monitoring Officer is a ‘qualified lawyer’[iv], which it does not.

This grade difference was discussed in the context of ‘a legal service of the future’ and a discussion report by the National Audit Office published January 2019[v]. The point well made five years ago was the Monitoring Officer is on a different rank to the other two with the Head of the Paid Service at the undisputed apex.

Indeed, such is the complexity of local government finance it requires a professional as S.151. So just how are the Chief Executive or the Monitoring Officer going to know if the S.151 has gone astray? Particularly with the long delays in completing Local Audits. This is a real and potentially catastrophic risk as has been identified in a number of Best Value interventions[vi]. Furthermore, the Monitoring Officer could be put in the position of challenging their S.151 line manager by going over their management head to the Chief Executive. That is only going to turn out to be ugly if the Head of the Paid Service is in all likelihood is going to say, ‘well I’m not the expert on finances that’s why we have a s.151!’

Flagging up standard two, it tells the Golden Trio to ‘act wisely’, sounds right if a bit crass. Then part of a picture emerges it says:

They have a personal and organisational duty to enquire about and give advice on the proposals, activities, intentions, actions, or omissions of the authority that may be taking place with significant financial or legal implications. To do otherwise is a dereliction of that duty.

Hang on, it is one thing to provide advice and quite another to have a roving brief.

To recap in my paper last year[vii] I said the role of the Monitoring Officer ought to be revised to that of the ‘Chief Governance Officer’ and that was a very different job to being head of legal. The idea that a second / third-tier officer can manage all the demands of a busy legal practice and ‘enquire about’ and ‘follow up’s’ is setting the Monitoring Officer up to fail. The Chief Executive and the section 151 Officer will simply say “well when it comes to the law ask the Monitoring Officer!”

The joint author(s) of the Code may retort - section 5 of the LGHA 1989 says the Monitoring Officer shall be given the resources. But at the expense of what? Local Government funding is not ring fenced by central government. Don’t expect the new regime to turn the cash taps on. With the sword of Damocles of a s.114 Local Government Finance Act 1988 Report hovering over many councils, the expansion of an existing officers establishment to check out governance (unless there is a peer review coming up), is unlikely in the extreme.

I find the expectations with the seventh standard (Deliver sound decision making: The outcomes of good governance) challenging. I extract (para 7.1 & 7.2):

…It is a responsibility of the statutory chief officers to understand, and to ensure that their authority understands:

    1. the need for the company/ entity
    2. the arrangements for a local authority’s interest in the company/entity
    3. that the business case for establishing / acquiring them was sufficient
    4. that business plans and delivery remain relevant to that business case
    5. that the financial and social objectives remain relevant to that business case
    6. that there are proper and transparent governance arrangements for control of the authority’s interests, including the identification and management of conflicts of interest, and proper arrangements for scrutiny and accountability.

The external company must also have independent governance arrangements in place, and the Directors must meet their obligations to act on its behalf.

7.2               Requirements

A)  The Head of Paid Service, Monitoring Officer and Chief Finance (S.151) Officer must be aware of the local authority’s interests in external companies or bodies and the decisions of those bodies that are to be reserved to the authority as a member or investor. They must       ensure that there are reporting mechanisms in place for issues of financial, legal or ethical concern in relation to those external companies or bodies.

B)  The head of paid service, chief finance officer and monitoring officer should keep up to date with performance against the business plan and on the social and financial returns on investment in respect of those external companies or bodies that the local authority holds an interest in and take appropriate action where this highlights matters of concern…

So now the Monitoring Officer has a responsibility for business case appraisal? Furthermore, the performance metrics of the companies will need to be monitored, so where is the skills set for this going to be found? Well maybe at Chief Officer level but certainly not at second or third tier while running a legal service. These demanding obligations simply reinforce my argument that the Monitoring Officer role needs to be re-defined as a stand-alone Chief Governance Officer.

Across the country the railways have been subject to a long running dispute over the requirement by the employers to the drivers to agree to new more onerous terms.

Here the Golden Triangle is crystallising various obligations on the three. I am sure Solace and CIPFA will extract better JNC remuneration as a result. But what about the Monitoring Officer? Many are not JNC’s and they have no negotiating body. When it comes to fault-finding as I have argued in a number of features on Local Government Lawyer there seems to be an emerging trend of “it’s the same the whole world over, it’s the [Monitoring Officer] that gets the blame”.

Better engagement with elected politicians

Now, a further observation. The Code is sparse on the relationship with elected politicians and only mentions the political leadership once (para 4.2 (h). This needs re-visiting. Take the scenario that the ‘golden three’ agree let’s get this document adopted by council, maybe put it in the constitution? Sounds sensible.  So, they parade in to see the leader. Just what will the politicians think if presented with this current document as a lever for change? I think there is a risk of alienating rather than winning over. It could turn into rather awkward meeting[viii]. Any ‘golden guidance’ needs to be fully inclusive of the leader of the Council and their political leadership team.

Conclusion

While a laudable effort, this Code of Practice puts extra responsibilities on the Monitoring Officer’s position without proper consideration of where the resources are to make it happen nor who the Monitoring Officer is. Max Caller recently said that the Monitoring Officer was a full-time job. He speaks from experience of a trouble shooter. The current default position of tacking the Monitoring Officer onto another role (which likely is the head of legal) is getting the priorities wrong.

What is needed is a new Localism Act mark II standards regime with primary legislation establishing the role of ‘Monitoring Officer’ to a statutory post of Chief Governance Officer in its own right and be held by a legally qualified person who is a solicitor or barrister of at least 10 years post professional qualification. This needs lobbying by the professional representative groups.

Finally, when this Code is reviewed, let’s see greater involvement of the political leadership of the local authority[ix]. Elected Members need to be at the heart of governance. Indeed, it would be a good move for councils to appoint their leader as a lead Member for standards. That way the Monitoring Officer’s role and duties will be better appreciated and resourced.

Dr Paul Feild is a Principal Standards & Governance Solicitor. His 2015 Doctor of Business Administration thesis was ‘How does Localism for Standards Work in Practice? The Practitioner’s View of Local Standards Post Localism Act 2011’. He has been a deputy Monitoring Officer in various public authorities since 2000 and researches and writes on finance and governance issues. He can be contacted This email address is being protected from spambots. You need JavaScript enabled to view it.. His opinions are his own.

[i] ‘Golden’ - with all sorts of connotations it means all sorts of things e.g. ‘Golden Retriever’ or ‘Golden Syrup’ or ‘Kingsman-Golden Circle’ to the downright weird i.e. ‘Golden Bough’ or ‘Golden Dawn’ or ‘Life is Golden’ Suede

[ii] Joint National Conditions

[iii] The Monitoring Officer as Chief Governance Officer (localgovernmentlawyer.co.uk)

[iv] At Para 5.1 it says the HofPS and the MO should be suitably qualified – but as what?

[v] Local authority governance - National Audit Office (NAO) report

[vi] See 15 June 2023 Thurrock Council: Best Value Inspection report - GOV.UK (www.gov.uk)

[vii] The Monitoring Officer as Chief Governance Officer (localgovernmentlawyer.co.uk)

[viii] Has this Code got the LGA approval?

[ix] The Golden Quad?
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