Best Value, radical change, and accountability: An interview with the Accounts Commission

In our latest interview, LGIU’s Chief Executive, Jonathan Carr-West, sat down with Jo Armstrong and Andrew Burns, Chair and Deputy Chair of the Accounts Commission, to dive into the meaty topic of local government finance, tackling the key challenges, trends, and the lessons learned from the Best Value Reports. 

Interviewees background

Jo is an internationally recognised economist and finance expert, having worked in the public, private and third sectors across the UK. As a senior civil servant, Jo provided budget advice to the Parliamentary Committees of the Scottish Parliament, including the Local Government Committee. Andrew also has extensive experience working across different sectors in senior roles. He is a former Leader of the City of Edinburgh Council, former Convener (Chair) of the Scottish Council for Voluntary Organisations, and has served on the Commission since 2018. The Q&A explores the Commission’s role.

Can you explain the relationship between the Accounts Commission, Audit Scotland and the Auditor General and specific areas of accountability? How does this tripartite structure work?

Jo

There are three different bodies. The Auditor General is responsible to the Parliament for auditing and monitoring performance in all the devolved bodies that are not local government bodies in Scotland. The Accounts Commission is responsible for doing the same, but for local government, Audit Scotland is the executive that provides the support and reporting for both entities. So it’s a tri-partite arrangement, it works individually, but also collectively, and we therefore have a strong understanding of what’s happening across the whole of Scotland’s public sector.

Andrew

Thinking of it in local government terms, I think of Audit Scotland as the officer corps, in effect. They provide all the executive work to both the Auditor General, who’s an individual appointed by the Parliament, who does the national bodies, and the Accounts Commission, which is a board of 12, and we audit local government bodies in Scotland.

Could you please provide us with your overview and insights into the current state of local government finance in Scotland?

Andrew

The challenges that face Scottish local government are really no different, I would imagine, than the challenges that face local government down south in England or across in Wales or Northern Ireland; they really are severe. I came off the City of Edinburgh Council nearly 10 years ago, and there was pressure then. We’re sitting here in 2025, and the pressures are now much more significant.

You’ve got national priorities that are driven by the central government here in Edinburgh. Those national priorities are probably quite similar across all four nations: education, health, and social care. They get protected, but that does mean that other service areas like libraries, sports facilities, swimming pools, and leisure facilities get an adverse gearing effect in terms of the protection that they have. Local government leaders up here, as per down south, face really difficult decisions about what to keep alive in those areas.

Facing significant challenges, how can Scottish councils progress and find a way forward?

Jo

Local government has been involved in delivering efficiency savings for years. So, efficiency savings are no longer going to be enough to square the circle. And the demand pressures are growing. We’ve got an ageing population. We’ve probably got a sicker population. And we’ve got a more sparse population. This adds to the challenges in some local government areas.

We have been emphasising the need for a pace of change. We have been going on about the need for transformation to change how services are delivered. While some of that is helpful, it’s not sufficiently transformative to deliver the significant savings that are now expected. And we now have a population that expects more, as they’re paying more, given that council tax is increasing.

So we are arguing strongly for more radical change than is perhaps comfortable for some. For example, a more radical change we’re seeing is the recent best value review we’ve just completed on North Ayrshire and the desire for the three Ayrshires to start thinking about coming together to deliver services across that Ayrshire region.

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In a way that saves costs at the back end, possibly, but actually maintains a service level that’s what the local people want. So we haven’t got an answer that’s fit for purpose across the whole of Scotland because it would be wrong to say that. I think local democracy and local requirements are different.

However, we are challenging those who deliver services more expensively than others to start examining what the data is saying. We use the Local Government Benchmark Framework data to illustrate why. Why is it possible that some councils can deliver services more cheaply than others? If it’s not about sparsity and it’s not about a desire to do it differently, then there’s an opportunity to use some of the data to do it differently. So we’re challenging more, trying to identify those who are doing it better and using them as exemplars. So the North Ayrshire example and the Borders Best Value Report clearly signal a desire to be much more radical in how they deliver those services, and we’re up for supporting that.

How does the Accounts Commission monitor a council’s financial health?

Andrew

The core of what that entails is the annual audit. Audit Scotland officers, the executive members of the organisation, are present in all 32 local authorities and other bodies across Scotland on a daily, weekly, and monthly basis. So the annual audit provides the core of that monitoring. And so, through the Controller of Audit, who’s an officer of Audit Scotland, and a statutory appointee, reports directly to the Accounts Commission. Through that officer, we receive updates on all those 32 annual reports on a cyclical basis. That’s the core of how finances are monitored, and that would be the first instance of a red flag being raised.

Beyond that, the officer I just mentioned also has the power, separately from the Annual Audit, to raise what’s known in Scotland as a Section 102 report. If an issue arises that raises a concern, the Control of Audit can initiate a report on that matter.

We’ve had one just recently, in the last few days, where a significant cyber-related issue was raised. The Controller of Audit identified this issue, raised a Section 102 report, and it has now been published. It’ll be live on the Audit Scotland website right now, and that includes lessons applicable to all 32 local authorities in Scotland. In fact, it will likely apply to all local authorities across the UK.

How can councils balance the need for significant savings alongside ensuring communities’ voices are heard when delivering local government services?

Jo

We see it being done in a variety of ways; there’s no one-size-fits-all. If you don’t do it, there’s an increasing likelihood that you’ll end up with a judicial review, which will not be cheap. So if it’s about saving costs in the future, then think about how to engage effectively with your communities in a way that allows you to have some greater evidence to support the prioritisation that’s going on. We recognise that there’s a likelihood of excessive demands, insufficient funding, even if we were more efficient and effective.

But we are challenging the notion that if you want to cut services, if you want to, or if you want to spend more per unit than others, then the justification for that is not because we want to, it’s because that’s what we’ve heard from our

communities is what they are willing to pay for. And as we look to increasing council tax, there’s an increasing expectation of better outcomes. I think it’s incumbent upon local government chief executives and finance directors to provide this service. To actually arm themselves with the evidence that justifies why they are arguing for what they want in terms of their expenditures and for the council leaders to have the evidence that supports their overall budget process that says we have to make these cuts, they’re not comfortable but we’ve got the evidence supports that the prioritisation fits with what our communities are telling us they want. And I’m not naive enough to think that’s easy. I’m not naive enough to think you’ll get unalloyed joy at the end of a process, but not doing it, we’re now seeing judicial reviews becoming more often the solution. Those are not cheap, and they are an indicator that you’ve lost the trust of the communities. Engaging earlier, more frequently, and more effectively is something you should budget for. That’s not a nice-to-have; that’s an essential part of identifying how you prioritise your spending.

How do the Best Value reports focus on going beyond compliance to help councils drive change? What’s your approach to those reports?

Andrew

The Commission will challenge local authorities to accelerate their transformation efforts, be more strategic in their savings initiatives, and so on. It’s a combination of that challenge, along with dissemination and support. So we’ll take the Best Value reports that come before the Commission, as I referenced earlier on various options we can take, can either do nothing at all, have no action, can state a set of findings which is usually a one or two sides of A4, a set of summary recommendations from the Best Value report or we can call a hearing. Now it’s very rare for us to do nothing. It’s also very rare for us to opt for the third option and have a hearing.

I’ve been on the Commission since 2018, and I’ve never seen a hearing; the last one was long before. So, more often than not, we create a set of findings based on the Best Value report, resulting in a dozen paragraphs at most. They will have some challenges in there regarding what has happened in terms of the report back from the officers at Audit Scotland on the Best Value report. Still, there will also be an attempt to try and get across clear messages in those findings that are then disseminated right across the local authority body in Scotland.

We had another very positive Best Value report a year or two ago from Dundee City Council, and the findings from that were widely disseminated across the local government body in Scotland. It’s that combination of challenge and support that we try to use to drive improvement and transformation.

Jo, you relatively recently became chair of the Commission. Do you have any plans for developing that system? Are you content with it, or are there future updates that you’re thinking about?

Jo

You know, in our discussion and work with various stakeholders, while they accept that we have a pointy stick at times, telling them what’s not good, they’re really keen for us to help them understand where good sits and what good examples there are.

Part of our desire is to actually help. The North Ayrshire work we’ve done recently, and the Western Isles response to the cyber attack, I think, are good examples of good performance.

What we are setting our stall out is actually to go back and monitor how our recommendations are implemented and to start to measure impact in a way that shows us our work is actually having an effect and good practice is being picked up. That will be part of the work programme for the next 12, 18, 24 months

I think it’s challenging to say there’s one good practice. It’s what’s fit for purpose and the willingness of individual local authorities to pick that up and implement it. Our convening powers are our way of helping to bring together a coalition of the willing to understand what’s possible, where the impediments might be, and to help them then think through how those good examples get more widely utilised or more widely understood.

We are aware that all our Section 102 reports are read by the directors of finance and the chief executives. We also know, for example, we did a section 102 on Glasgow more recently, and the outcome of that, and the approach that Glasgow took, has now been implemented in another couple of authorities. So, there are lessons to be learned. The more we flag up, I’m now writing and explaining to chief execs, finance directors, and council leaders, these are examples that they ought to be looking at more closely to understand how it might have been of benefit to them to implement.

Many countries lack an Accounts Commission equivalent. What are the importance and benefits of this approach, and what can others, like England, learn from it? 

Andrew

There’s clearly something happening in Scotland that is of interest to local authorities, and the other national governments keep an eye on developments here. I think the benefit of the Accounts Commission is that it provides a purely local government-focused lens through which to look at financial performance.

The Auditor General, appointed by the Parliament, audits all the national bodies, and the Accounts Commission, in effect, audits all the local bodies. And that gives a real status and place to local government in Scotland that I think doesn’t currently exist in England. I am slightly reticent to say what works here might work down south, but I think that’s the main benefit. It gives local government a real status that it wouldn’t otherwise have.

Jo

It’s very easy to fall into a routine of producing reports for their own sake. And there are plenty of reports that could be written. Andrew and I have been very keen to ensure that whatever we’re doing actually answers the ‘so what’ question and clarifies where impact and best practice sit, so we can help the sector as well as hold it to account.

Finally, next year will be significant with the Holyrood election in May. Elections bring dynamism and the impetus for change. If you had a magic wand, what change/improvement would you make for Scottish local government?

Andrew

Well, I think for me personally, it would be a three-year settlement for local government.

Very similar to other nations in the UK, at the moment, local government in Scotland receives an annual settlement. Jo and I, as Deputy Chair and Chair respectively, along with our 10 other colleagues on the Commission, spend a lot of time asking the 32 local authorities in Scotland to develop medium-term financial plans. The vast majority of them do have medium-term financial plans that span 3 to 5 years. Yet, they do that on the back of an annual settlement from the Scottish Government.

The Scottish Government will routinely say, we only get an annual settlement from the National Government. But that’s not a good enough excuse for them not to give a three-year indicative settlement at least to local government in Scotland. And we ask local authorities to do that ourselves as the Commission, and the vast majority of them deliver that. So, my one wish is that the incoming Scottish Government, whoever it is, commit to giving a medium-term three-year financial settlement, even if years two and three were indicative, I think it would make a huge difference to the stability and long-term ability of local government to plan in Scotland.

Jo

What would be supportive to the sector is to incentivise the more radical change that I think we’re looking to help support. And that’s not about structural change; that’s just about encouraging, as I say, the community of the willing to make the necessary changes. Because at the moment, ideas are coming forward, but there’s no money to actually pump around the ability to do that. It’s possibly lobbying Peter to pay Paul for implementing investment and new approaches in a way that is really hard to justify if you can’t see the end game in a 12-month or even a three-year period.

So it would be the Scottish Government to think about how to incentivise the change that is there or thereabouts, but hasn’t got the financial power or the political support to make it happen quickly.