TRAC: TRANSPRENCY IN REPORTING OF Corruption in UK Local Government: The Mounting Risks Liz Dávid-Barrett, University of Oxford

1.Approach and methodology 2.Inherent corruption risks in 5 policy areas 3.Weakened accountability 4.Conclusions

1. Approach Audit Conduct of elected members Public scrutiny: Voters, Whistleblowers, Media Klitgaard Corruption = Opportunities - Accountability Distribution of power/resources Interaction with private sector

2. Inherent Corruption Risks 1 Procurement STRUCTURAL RISKS: High-value transactions Complex transactions Post-award contract implementation Buyer-user disconnect TYPES AND IMPACT: Cronyism, favouritism Conflicts of interest Mis-allocation of resources Unfair competition CASE: Wirral Highways

2. Inherent Corruption Risks 1 Procurement 2 Outsourcing STRUCTURAL RISKS: Unclear accountability Weak monitoring Little competition among providers CORRUPTION TYPES AND IMPACT: Conflicts of interest Revolving Door Value for Money? CASE: SouthWest One

2. Inherent Corruption Risks 1 Procurement 2 Outsourcing 3 Planning decisions STRUCTURAL RISKS: Powerful interests Officer/member discretion Difficulty of detecting influence TYPES AND IMPACT: Cronyism, favouritism Conflicts of interest CASE: East Devon

2. Inherent Corruption Risks 1 Procurement 2 Accountability of outsourced services 3 Planning decisions 4 Housing: potential collusion in fraud STRUCTURAL RISKS: Discretion over allocation Weak investigative capacity Monopoly power of monitors TYPES AND IMPACT: Cronyism, favouritism Right-to-buy manipulation Organised crime CASE: Nottingham City

2. Inherent Corruption Risks 1 Procurement 2 Outsourcing 3 Planning decisions 4 Housing: potential collusion in fraud 5 Individual Electoral Registration STRUCTURAL RISKS: Discretion over allocation of resources for registration Difficult to detect corruption TYPES AND IMPACT: Politically motivated allocation of resources for registration

3. Weakened accountability of the system 1 Audit AUDIT COMMISSION ABOLISHED No standard-setter No public audit ‘backstop’ No collection of data on trends INTERNAL AUDIT Cuts mean reduced capacity Audit Committees weak EXTERNAL AUDIT Compromised independence Disincentives to challenge Uncertain transparency

3. Weakened accountability of the system 1 Audit 2 Standards for elected members STRUCTURAL RISKS Accumulation of informal power Patronage power of leaders PROBLEMS WITH NEW SYSTEM Weakened monitoring and enforcement Reliance on criminal offence (Threat to independence of Chief Execs, Financial Officers and Monitoring Officers)

3. Weakened accountability of the system 1 Audit 2 Standards for elected members 3 Armchair auditors? –Media –Voters –Whistleblowers LOCAL MEDIA: In decline Loss of important arm of scrutiny VOTERS HAVE WEAK VOICE: One-party councils Uncontested seats WHISTLEBLOWERS: High personal costs Retribution is common Requires supportive culture – unlikely to exist in most corrupt places

Conclusions: Mounting Risks INHERENT OPPORTUNITIES Procurement Outsourcing Planning Housing Individual Electoral Registration REDUCED ACCOUNTABILITY Abolition of Audit Commission Cuts in internal audit and investigation Compromised independence of external audit Weaker rules, monitoring and enforcement of members’ standards Decline of local media as check Opportunities – Accountability -> Mounting Corruption Risks

Notes on methodology This report is not based on investigations of corruption cases and does not attempt to measure the amount or cost of corruption in local government. Such tasks would require extensive resources, and corruption is by its nature difficult to research since the perpetrators have an interest in concealing it and often the power to do so as well. Our approach is rather to identify risk areas where corruption might easily occur and go undetected or unpunished. We do this by examining the robustness of institutional structures and analysing known cases studies of corruption, misconduct, allegations and scenarios informed by experience of real life events in local government, predominantly in England. This research is based on a review of relevant parliamentary debates, committee reports, government consultations, academic and international organisation research, and on 24 interviews conducted in person or by telephone with local government experts and stakeholders, including elected members, senior officers, auditors and academics.