How to fix the accessibility of council finances – for the good of local democracies

When council budgets are incredibly stretched and the sector is in the midst of major upheaval, ensuring that council finances are accessible enough to be meaningfully scrutinised by councillors, journalists, or members of the public is more important than ever. And yet our new research has found that even experienced researchers, accountants and councillors struggle to find and understand local authority financial information in England.

If that’s the case, what does that say about local democracy? And what chance does the public have?

In a research collaboration, Research for Action and the University of Sussex spoke to councillors, council officers, academics, accountants, journalists and sector bodies to examine barriers to making local authority financial information accessible to councillors and the wider public.

What we found was a lack of standard reporting requirements across different councils, strained council capacity after years of real-terms budget cuts and a fragmented data landscape with no standard formats for publishing financial information.

As an experienced local journalist myself, I know first-hand how hard it can be to truly get my head around my local council’s budget and accounts, or compare it with other authorities. This view was echoed by experienced academics too, as well as councillors who should be well enough informed to make decisions based on that information.

While there have been laudable efforts by those in the sector to provide accessible data on council finances from the likes of Oflog, CIPFA, the LGA and most recently Room 151, there is no single place where a local resident can easily find accessible information about their specific council’s spending.

At Research for Action, we believe accessible information is a core ingredient of public participation and effective democracy. But pressures on local authorities to find savings every year, get creative with new sources of income and navigate competitive bidding for government grants has also increased the complexity of local authority finances.

This creates a challenging environment in which, even with the best intentions, local authorities struggle to produce open, accessible and accountable financial information for councillors and members of the public to scrutinise.

And while the Coalition government wanted an ‘army of armchair auditors’ to scrutinise local authority accounts in place of the Audit Commission, previous work by Research for Action has shown that ‘citizen auditors’ require a high level of skill, and are frequently treated as ‘trouble-makers and time-wasters’ by overstretched council officers.

Some interviewees, including council officers and sector bodies, argued that accessibility was less of a priority in the face of a mounting crisis in local authority finances, but accessible financial information is not a luxury. It is key to effective local democracy.

While there isn’t a single shining example of any one English local authority making information completely easily accessible for local residents, there are a handful of councils exploring interesting alternatives. These include Leeds City Council’s Data Mill North, which publishes all council spending transactions, not just everything over £250 like councils are required to do, and Redbridge Council’s interactive Datashare platform that allows you to search, filter and visualise council spending data without having to download and open lots of different spreadsheets.

How to open up council finances

Based on our findings, we set out a series of recommendations for greater transparency and openness.

Firstly, the government should introduce new data standards for local government to improve accessibility. This should include making financial information machine-readable where possible and using accessible file formats. An easy win in this area would be to create a single repository for all local government financial information.

Local audit reforms are also an important piece of the puzzle. The new Local Audit Office (LAO) should be made responsible for local government financial data, including making it publicly available with tools to enable comparison and oversight. A more ambitious idea for the new LAO could work with councils to create a traffic light warning system for the financial health of local authorities based on indicators that are timely and easy to understand, taking inspiration from Japan.

Council accounts were highlighted as a particularly technical and opaque part of local government finance. That’s why councils should be mandated to attach a narrative report to their annual accounts, as previously recommended by the Redmond Review.

We think that the Local Government Data Explorer, recently scrapped, should be replaced with a data visualisation that is genuinely accessible and interactive, perhaps taking inspiration from a dashboard created by academics in Ireland.

The other part of the problem is that councillors often don’t have the knowledge and skills to properly scrutinise the complicated world of local government finance. That’s why we’re calling for greater support and training for councillors to enable better financial scrutiny, which was recently recommended by the Housing, Communities and Local Government Committee, as well as public resources to improve literacy around local government.

It’s important to note that any reform to how financial information is presented needs to come in the context of adequate funding for local authorities after more than a decade of real-terms cuts.

While the sector faces great upheaval in the next few years through local government reorganisation and English Devolution, these reforms also present an opportunity to improve transparency – whether that’s at unitary or combined authority level.

This isn’t just a nice to have. We believe that greater openness will ultimately facilitate better public participation and healthier local democracies. Not only does increased public engagement and better external scrutiny benefit local authorities, but more accessible financial information will also make the work of councillors and council officials easier – a win-win that is worth prioritising.