§ Mr. Barry Field
To ask the Secretary of State for the Environment what proposals he has for strengthening the financial management of local authorities.
§ Mr. Howard
My Department has today written to the local authority associations, the Audit Commission and the relevant accountancy bodies, explaining the action the Government propose to take on two related measures to extend the powers and duties of local authority treasurers and auditors.
Following the proposals in the Green Paper "Paying for Local Government", we propose that the local authority treasurer should be required by law to hold a specified professional qualification, and that he should have a duty to report to his council if in his opinion it is proposing to make an unlawful payment or incur an unlawful loss or deficiency, or if its proposed expenditure is likely to exceed its available resources for the year in question. The council will be obliged to consider this report at a meeting held within 21 days of the sending of the report, and determine what action it proposes to take. It will be prohibited from proceeding with the actions which are the subject of a report, or from incurring new contractual commitments if the report concerns prospective overspending, until it has held such a meeting.
My Department has also issued a consultation document on proposals to enable auditors of local authorities to take early action to secure compliance by authorities with the law governing their financial affairs. Copies of this document have been placed in the Library. 111W These proposals are based on recommendations made by the Widdicombe committee and on proposals for changes in audit legislation submitted by the Audit Commission.
I believe these proposals will strengthen the position of the treasurer and the auditor, and thereby discourage imprudent behaviour and prevent the erosion of sound financial management practices in local government. It is our intention to introduce provisions to this effect during the present Session of Parliament.