Third Delegated Legislation Committee
1 September 2025
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Third Delegated Legislation Committee House of Commons
15:31 - 15:38
Speaker 1
The draft local audit amendment of the definition of smaller authority regulations 2025. I call.
15:38 - 17:53
Speaker 2
The Minister: I beg to move that the committee consider the draft Local Audit Amendment of Definition of Smaller Authority Regulations 2025. These regulations were laid before Parliament on 16 June 2025. Local audit is vital for ensuring the proper use of taxpayers' money and for maintaining trust and confidence in local public services. But for too long, it has been placed under significant pressure, leaving an unacceptable backlog that we are determined to resolve so that we can be assured that the sector is fit, legal, and decent. It is on this basis that the government is committed to reforming the local audit system, addressing long-standing concerns around proportionality and capacity.
Smaller authorities include bodies like parish and town councils, internal drainage boards, port authorities, and parish meetings. They deliver important local services, from maintaining local community halls and allotments to managing small ports and drainage systems, but they do not require the same financial reporting or audit processes as larger authorities. The focus of much of our reforms is on the principal audit regime for larger authorities, which, quite frankly, is broken. Also, we need to make sure the smaller authority audit system is sustainable and well-functioning. A small element of these reforms, including in these regulations, is to ensure that the system overall is proportionate and responsive to concerns and feedback.
We are not removing assurance and accountability for smaller authorities. This will continue and be provided for the annual governance and accountability return, which we are committing to review. This is to ensure that it remains fit for purpose by improving transparency, ensuring that administrative burdens on smaller authorities are proportionate, while enhancing the effectiveness of local reporting, assurance, and audit processes. Uplifting the threshold for smaller authorities is primarily a preemptive measure to avoid smaller authorities ending up in the principal audit regime in the future, which would be disproportionate to their size and functions. Raising the threshold to £15,000,000 is not about reducing accountability.
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