Accountability and Transparency in English Local Government: Moving from ‘Matching Parts’ to ‘Awkward Couple’?

• Author: Laurence Ferry,Peter Eckersley,Zamzulaila Zakaria
• Date: 01 August 2015
• DOI: http://doi.org/10.1111/faam.12060
• Published date: 01 August 2015

Financial Accountability & Management, 31(3), August 2015, 0267-4424

Accountability and Transparency in

English Local Government: Moving

from ‘Matching Parts’ to ‘Awkward

Couple’?

LAURENCE FERRY,PETER ECKERSLEY AND ZAMZULAILA ZAKARIA∗

Abstract: Although excessive transparency and accountability demands can have a

counterproductive effect on organisational performance (Bovens, 2005), longstanding

hierarchical accountability structures to ensure financial conformance in English

local government continue to endure. Interestingly however, the previously top-down

regime for performance accountability in English local government has been replaced

by bottom-up mechanisms such as greater transparency and a more open market for

public services. Using the framework developed by Hood (2010), this paper will show

how such reforms mean that transparency and accountability are moving from being

‘matching parts’ to an ‘awkward couple’, and how this has significant implications

for public services.

Keywords: accountability, transparency, English local government, budgeting,

performance measurement

INTRODUCTION

Budgeting and governing in the UK public sector can be viewed as constituting

three acts (Ferry and Eckersley, 2011, 2012 and 2015). In this view, Act 1 is the

spending review that sets out a framework for income and expenditure levels

∗The first author is Lecturer in Accounting and Finance, Newcastle University. The second

author is PhD Candidate, School of Geography, Politics and Sociology, Newcastle University.

The third author is Assistant Professor in Accounting, International Islamic University of

Malaysia, and Research Fellow at the University of Bath. This work was supported by the

Economic and Social Research Council (grant number ES/J500082/1).

Address for correspondence: Laurence Ferry, Newcastle University Business School,

5 Barrack Road, Newcastle upon Tyne NE1 4SE, UK.

e-mail: laurence.ferry@ncl.ac.uk

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346 FERRY, ECKERSLEY AND ZAKARIA

over the medium term and Act 2 is the annual budget that enables detailed policy

choices with associated financial impacts and implications. The accountability

and transparency arrangements that afford confidence in the accounting and

internal management practices (Hood, 2010; and Ball, 2012) could be perceived

as constituting Act 3.1There is some disagreement over how extensive and

independent these arrangements are (or should be) in practice (Heald, 2012), as

well as how much information should be disclosed to the public (Radcliffe, 2008

and 2011; and Funnell, 2011). However, it is generally accepted that auditors

perform a crucial role at this point – not only in the UK, but also in other

jurisdictions – because they provide citizens and their representatives with an

assessment of whether policies are having their desired effect and thereby help

to hold government to account (Bovens, 2005). Indeed, it is generally recognised

that a balance between financial conformance and operational performance is

essential in public sector governance (IFAC, 2011 and 2013; and CIPFA 2010a

and 2010b) – meaning that service outcomes need to be assessed alongside a

financial audit.

This article analyses how the UK Central Government has changed the

accountability and transparency arrangements for local government in England,2

and thereby revised the script for Act 3. Most notably, the Government has

abolished the Audit Commission, a non-departmental body that used to audit

English municipalities and oversee a complex system of top-down performance

assessment for local government. The Audit Commission’s financial auditing

responsibilities have been transferred to the National Audit Office (which used

to focus solely on central government departments), and the local government

performance framework has been replaced by requirements for municipalities

to publish a range of datasets online for public scrutiny (Eckersley et al., 2014).3

Specifically, the article considers the impact of these reforms using a conceptual

approach based on the idea that accountability and transparency are either

‘Siamese twins’, ‘matching parts’ or ‘awkward couple’ (Hood, 2010). In this

context, it illustrates how hierarchical performance accountability arrangements

have been replaced by a bottom-up approach that relies on data transparency

and open competition. As a result, accountability structures for municipalities’

operational performance (the mechanisms that assess whether they deliver

services to a high standard) have been broadened beyond accountants and

the audit profession. Meanwhile, top-down monitoring of financial conformance

(ensuring that spending remains within agreed budgets) has persisted, with

Audit Commission responsibilities in this regard transferring to the National

Audit Office. Although the article focuses on English municipalities, its findings

are equally relevant for other countries because robust accountability procedures

are recognised as good practice around the world.

As O’Neill (2006) argues, transparency only requires the dissemination of

datasets, which means they do not need to be comprehensible to the reader – and

there may be no control over their quality. As such, the nature of the data that are

published influences how effectively an agent can be held to account, as well as

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2015 The Authors Financial Accountability & Management Published by John Wiley & Sons Ltd