The Public Accounts Committee has raised alarms about the Ministry of Housing, Communities and Local Government (MHCLG) being unable to effectively monitor local government finances, especially as councils grapple with increasing financial pressures.

This concern is underscored by the fact that only 10% of the 426 local authorities in England provided reliable financial data for the 2022-23 accounts, which has hindered the National Audit Office's ability to sign off on government accounts.

In light of these issues, the committee has demanded that the Government outline a plan within six months to address the backlog of audits and reduce the missing data that complicates financial oversight.

Despite the unreliable data, the Government claims to have alternative methods to assess local government finances, such as informal conversations and auditors' reports, although these have been deemed insufficient by the committee.

The committee highlighted specific cases, such as Barnet Council's unlawful pension spending, which went unreported to the MHCLG for four years, demonstrating significant gaps in oversight.

A recent report on the Whole of Government Accounts (WGA) for 2022-23 revealed that unreliable data has led to an overstatement of net income by £34.4 billion and net debt by £31.7 billion, raising serious concerns about financial transparency.

The WGA is intended to provide a comprehensive overview of public sector finances and highlight risks such as climate change and rising health expenditures, yet it fails to adequately contextualize these challenges.

The Office for Budget Responsibility (OBR) has warned that if current trends continue, public sector net debt could nearly triple over the next 50 years, emphasizing the urgency of addressing these financial issues.

While the Government has introduced legal deadlines for completing council accounts and plans to establish a local audit office, there are significant concerns regarding the enforcement of these deadlines and potential consequences for non-compliance.

Audit firms are currently facing capacity issues, which raises doubts about the effectiveness of the proposed local audit office and its ability to conduct necessary assessments.

Committee Chair Sir Geoffrey Clifton-Brown stressed the importance of accurate WGA data for public financial transparency and decision-making, warning that the unreliability of current data effectively makes public finances a 'closed book'.

The lack of financial transparency coincides with increasing demands for services from councils, driven by rising populations and decreasing income levels, further complicating the financial landscape.