Mr. Graham Doyle:

I thank the Chairman. I am pleased to be here to assist the committee in its examination of chapter 3, central government funding of local authorities. The Chairman has introduced my colleagues in attendance, who are mainly from the local government side of the Department. We look forward to discussing the arrangements for accountability and oversight of the local government sector in the context of the report. I have provided advance briefing material for the meeting, including my opening statement and responses to the questions we received with the letter of invitation.

I acknowledge the vital role local government plays in our society as the arm of government closest to the homes and businesses of our citizens. The role local authorities play and the services they provide are key to the good functioning, place-making, development and economic well-being of our communities. Never was that more obvious than during the pandemic, when local authorities were central to the community-led response that helped to protect people throughout our society, particularly the most vulnerable. They were also central to the sustainable reopening of our local economies when restrictions were lifted. The local government sector has again been asked to take on a key role, in co-operation with a number of Departments, in the Ukrainian humanitarian crisis. Local government has shown time and again it is willing and able to step up in these situations.

When we explore issues of governance, accountability and oversight arrangements in the local government sector, it is important we begin by acknowledging the constitutional status of local government. The twentieth amendment to the Constitution provided a constitutional basis for local government in Ireland as a forum for democratic representation and for the exercising of statutory functions at local level that are separate from the Houses of the Oireachtas. Local authorities, therefore, are independent statutory bodies with their own democratically elected councils and management structures. We would compare them with a board of directors of a corporate entity which is supported in the performance of its reserved functions by a full-time chief executive. The council, acting by resolution, decides on the policy of the local authority, and the chief executive operates within that framework of policy. The council enjoys powers to request information, issue directions, oversee the work of the chief executive and hold him or her to account. The council performs the primary oversight role in the local authority. The members of the council ultimately put themselves before the electorate every five years.

An internal audit function is in place in every local authority. It provides independent opinion on the adequacy and effectiveness of the internal controls across the organisation and it provides assurance the significant operating risks are identified, managed and controlled. That function is independent in the performance of its duties and reporting. The chief executive is required to ensure the internal audit function is adequately resourced. The role of the audit committee was strengthened in the Local Government Reform Act 2014, making the committee a key component of local authority governance arrangements. The audit committee’s independent role is to support the elected council by providing an independent assessment of the activities of management in controlling the local authority and the quality of the risk management, financial reporting, financial management and internal audit. The results of that are reported to and considered by the council. Within the organisational structure, the audit committee's position is to report directly to the council, and that maintains its independence from the executive.

The local government audit service, LGAS, performs the independent, external audit of local government, providing independent scrutiny of local authority finances. The local government auditor sets out, in the form of a management letter to the chief executive, any issues raised as part of the audit. That report, including the chief executive’s response, is published on both the local authority and the Department's websites. The audit committee considers that report and prepares a report to the elected council for its consideration. The council considers the financial statements, the audit report and the report of the audit committee.

The Comptroller and Auditor General has mentioned the establishment of the National Oversight and Audit Commission, NOAC. The governance and accountability arrangements that the Comptroller and Auditor General and I have outlined are multilayered and robust. They have been set down in legislation made by the Oireachtas, most notably in the Local Government Act 2001, and the Local Government Reform Act 2014 strengthened them. The role of the Minister and the Department is to ensure an appropriate framework of policy and legislation is in place in relation to local government systems, including its structures, human resources, financing and broad oversight as set out in the Local Government Act 2001. The Minister does not have a role in individual decisions made by local authorities, except in a limited number of circumstances where there may be a specific statutory provision for ministerial approval.

In the context of this session to discuss chapter 3, it is important to note there are robust arrangements in place for ensuring appropriate oversight governing the flow of funds through Government sources to local authorities. Local authorities receive a substantial part of their annual funding from a range of central Departments and agencies, which the Comptroller and Auditor General has outlined. A significant element of funding comes from the Local Government Fund, and one of my colleagues runs the administration of that fund.

The Department has the necessary mechanisms in place to provide appropriate assurance about the regularity, propriety and efficiency of the Department’s operations in the disbursement of public moneys, including the substantial funding going to local authorities. These mechanisms include the principles of public financial procedures and the public spending code as outlined in the Department of Public Expenditure and Reform's circular 13/2014, and they are underpinned by strong internal control systems, sound internal audit, audit committee arrangements and effective risk management. Funding from other Departments is subject to a similar control environment.

For funding provided to local authorities from this Department, the Department, as sanctioning authority, assesses each project and proposal for suitability, value for money, and compliance, including with the public spending code and statutory building regulations etc. Detailed grant approval, payment and performance monitoring arrangements are in place across all Department funding arrangements. Overall, policy is set by Government but most often implementation is guided by a framework which is set at programme level. The Department rigorously analyses and evaluates that and it does so with the agreement of the Department of Public Expenditure and Reform. Local authorities operating projects under a particular programme do so under clear procedures and guidance set out in circulars and framework agreements.

The Department has continued to work closely with local government and will continue to do so, in recognition of the critical nature of the services local authorities provide to the public, which number in excess of 1,000 services. The highest standards in governance and oversight are also being applied to the disbursement and use of public funds, and this will not be compromised. My colleagues and I will be happy to respond to questions or issues that emerge in the course of the committee’s work today.