REPORT WARNS THAT DCLG IS COMPLACENT OVER COMMERCIAL RISKS COUNCILS FACE
A report by the Public Accounts Committee (PAC), has warned that the Department for Communities and Local Government (DCLG) has been “complacent” over the risk councils face from increasing commercial activities to yield income.
“The department does not have good enough information to understand the scale and nature of authorities’ commercial activities or which authorities are placing themselves at greatest risk and it does not use the information it does have to give it a cumulative picture of risks and pressures across the sector.”
According to the committee:
The DCLG suggested these activities are majorly an extension of long-standing activities and not necessarily more risky
Authorities are aware that new risks come from councils developing houses for market rent
Councils may not have the commercial skills and experience required amongst both members and officers
If commercial decisions fail, council taxpayers will eventually pay the billl and other council services will be under threat
DCLG and the Treasury have not been able to explain why councils’ investments on deposits are now at record levels
Investments on deposits grew to £26.1bn in 2015-16, compared to £18.5bn in 2010-11
The PAC has also asked the DCLG to send it an update – on how it is intensifying it understanding of council’s commercial activities, with a particular focus on risk- by summer 2017.
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