LGA chief executive Brian Briscoe said: 'We are concerned that local authorities have a conflict of interest when attempting to investigate potential wrongdoing through a public inquiry. Councils have a duty to the community and to individuals to ensure the true facts are uncovered, and to improve services and restore public confidence, but they also have a duty to the taxpayer to protect the financial position of the council.
'Public inquiries can lead to allegations that have not been tested in a court of law but which may lead to action being taken out against the local authority or individuals.
'The LGA is calling for guidance on this matter to clarity the situation, and would be happy to give evidence to any Law Commission inquiry into the matter.'
In September last year the LGA issued advice to local authorities setting out principles for local authorities to apply when considering arrangements for an inquiry. The guidance covers what to take into account when setting up an inquiry, terms of reference, liaison with insurance companies and what to say in statements about an inquiry and the events that have prompted it.
The LGA has produced a summary of the Waterhouse report to assist local authorities in getting to grips with the lengthy report.