There is a “big gap” between local audit and central government intervention in struggling councils, Rob Whiteman chief executive of CIPFA has told the Public Accounts Committee today.

Whiteman said the Ministry of Housing, Communities and Local Government should have an “oversight brief” in order to create more transparency about finances in the local government sector.

He told the committee on Wednesday: “I think audit committees are in need of improvement.

“There’s quite a big gap between, in effect, an unregulated sector and the nuclear powers that the secretary of state holds [to intervene],” he said.

“I think the department should be seen to have an oversight brief of pulling together information using data and working with sector – the Local Government Association, CIPFA and others – in order to more transparently deal with that,” he added.

Whiteman was resistant to the idea of recreating the Audit Commission - dissolved in 2015 – which he described as “a big bureaucratic edifice”.

He noted that local audit can be strengthened “without recreating the problems that we experienced with the Audit Commission.”

Whiteman pointed to increasing levels of commercialisation in councils and said this was further evidence that an “extra degree of governance” is needed.

Discussing the demise of Northamptonshire County Council, Gary Porter, chair of the Local Government Association, told the committee: “Northamptonshire was an open secret”.

He claimed that there was “plenty of oversight” but suggested that conversations between the sector and MHCLG have to be done “on an under the radar basis”.

Whiteman said: “We were all aware that Northants was going in the wrong direction. I think the policy question is ‘how is that oversight dealt with and does it need to be more transparent?’”

Jacqui Mackinlay, chief executive of the Centre for Public Scrutiny, said that her organisation had long promoted the idea of local public accounts committees but highlighted “a real lack of appetite” due to current financial pressures on the system.

“It would be an investment but if we are going to continue to devolve money, we also need to see that assurance mechanism follow that,” she added.