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AUDITORS CALL FOR LIMIT ON REVIEW COUNCILS' SPENDING

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The DoE should impose restrictions on outgoing English councils entering into new financial and contractual commitm...
The DoE should impose restrictions on outgoing English councils entering into new financial and contractual commitments before reorganisation, the Audit Commission says.

In a report entitled Time for a change? it recommends outgoing councils should not enter into long-term arrangements such as service contracts which could be costly to break, make major asset purchases or disposals or launch new capital projects with financial implications.

But it makes clear that while such actions might raise questions for auditors about whether councils are managing their finances lawfully, there is nothing in the reorganisation legislation to prevent them.

The report points out Welsh review legislation requires outgoing councils to consult with the incoming council or councils on contracts and disposals but no equivalent measures are included in the English legislation.

'The government should consider applying comparable provisions in England to support the work of monitoring officers and auditors, and to reduce the risk of substantial public expenditure being incurred in a poorly controlled way on projects previously considered to have low priority', it says.

The commission is already aware of councils facing reorganisation which are planning to commission new projects, the report says. Experience of the 1974 reorganisation suggests there will be a temptation to blow the balances before abolition.

In Time for a change? the Audit Commission sets out its first thoughts on how councils need to tackle reorganisation. 'We are interested in the how not the what', says director of local government studies Bob Chilton. 'We have kept out of the debate about whether there should be a reorganisation but we think it is timely now to start to break cover'.

The paper and consultation exercise are endorsed by the Association of District Councils, the Association of County Councils and the Local Government Management Board.

The paper starts from the premise that the current reorganisation is more difficult than any previous structural change. 'It will be doubly difficult because the mood in which reorganisation is taking place is not constructive and local government is financially constrained in a way that it was not in 1974', says Mr Chilton.

But he is confident when uncertainty on structure in a particular area is ended by a government decision, councils will throw themselves into making the new system work.

The report includes two tables on what outgoing and incoming councils need to do and when. It concludes successful changeover will be eased where outgoing councils have avoided taking unnecessary decisions with long-term service or resource implications and have their records ready for transfer.

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