MPs must adapt to changing accountability landscape after devolution

5 May 16

The Public Accounts Committee’s warning that devolution is hindering public spending scrutiny reveals a deeper challenge at the heart of the project: reform of Westminster itself

Plans for devolution are not a policy initiative, but a fundamental rebalancing of governance. To succeed, accountability must be devolved alongside power and this means that the highly centralised norm for the institutions of Westminster and Whitehall must adapt to the new decentralised reality.

However, these organisations have so far proved resistant to change, and the Public Accounts Committee report warning about the impact of devolution on Westminster scrutiny reflects this “business as usual” mindset. It finds that “increasingly complex delivery methods”, of which devolution is one, are undermining traditional accountability. Existing lines of accountability run in neat hierarchies aligned to separate Whitehall departments each with an Accounting Officer (AO) sitting atop, and answerable to Parliament for spending. Real world ‘wicked issues’ of delivery are rubbing up against this simplistic clarity. The committee cites City Deals as a policy which has uncertain accountability for spend, given that the devolved funding is a combination through different departmental streams.

This is certainly a challenge, but the report constrains itself largely within existing parameters. The problem with the current model of holding separate Whitehall departments to account separately for value of public money spent is that this does not accurately account for money wasted by cost shunting between departments. So while the Department for Communities and Local Government might balance its books on paper, where is the line of accountability following the extra public pounds spent through the NHS due to social care cutbacks by councils starved of resource?

The committee doesn’t challenge this fundamental inability of the existing model to cope with so-called “cross-cutting issues” – what we might call reality. Instead the report recommends a strengthening of existing silos by proposing AOs prepare better accountability system statements which were up to date and “fresh”.

This misses an opportunity to think more creatively about how accountability could work in a more devolved system of governance. Devolution presents an opportunity for new forms of accountability which track the value of public money closer to where it is actually spent. The focus of new accountability has been new directly-elected mayors, and the government should certainly clarify that they are ultimately accountable for devolved spending when they assume office. But how to track value for public money spent locally directly?

There have been calls, including from the Centre for Public Scrutiny, for local public accounts committees of local councillors to perform this function, potentially mirroring combined authorities. They would carry out a beefed up scrutiny role beyond just local authority spend alone, and have the investigatory power to consider value for all public money spent through separate public institutions in a place, for example hospitals, Jobcentre Plus and schools. This would be important in the context of increasing local integration of budgets.

Local PACs would have the potential to fulfil a useful investigatory function and spread the transparency and accountability that is the norm for councils to other public services locally. They would increase local understanding of the way the money flows in areas, and could inform the case for future devolution where evidence of the cost consequences of silos emerges. And quite apart from raising public awareness, their work could inform Parliament’s own role in holding the executive to account for the way money is spent.

But to achieve this – or another model that would strengthen local accountability for public money spent – Westminster and Whitehall will have to interface differently with localities as devolution progresses. New local accountability models could have a formal interface with Parliamentary committees so there is still a clear “line of sight”. But the relationship will have to change from one of “tiers” of accountability to “spheres” – involving clarity about where the buck stops, but acceptance that this might be locally rather than at Westminster.

Accountability for money spent through devolution is not simply a policy challenge. It raises more fundamental questions about how well equipped our centralised model of governance is for holding complex systems to account. These questions have not yet been fully addressed, but will need to be with increasing urgency. We are a highly centralised outlier of the Western developed world and decentralised accountability is something that every other advanced nation manages. But Westminster treats this direction of travel as a weird imposition to its formal conventions, the persistence of which it doesn’t question.

Perhaps the next PAC report could consider reform of the PAC itself, and how the traditional accountability structures it is part of must adapt to the changing, complex world around them.

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