New reforms to the local audit system will boost taxpayers’ confidence in council spending and streamline the sector so it’s fit-for-purpose, legal and decent, the government has claimed.

The government has set out 16 commitments to achieve this, including simplifying financial reporting requirements and increasing capacity to avoid reliance on a small number of auditors.

The reforms will be backed by up to £49 million of support to help councils clear their backlogs and cover the additional cost of restoring audit assurance. Releasing funds to councils will be reliant on compliance with statutory backstops and linked to the publication of audited accounts and audit fees being paid, the government says.

In addition, a further £15m of grant was paid to local bodies in March 2025 as part of an existing package to help meet the wider costs of meeting audit requirements and fees.

Jim McMahon, Minister of State for Local Government and English Devolution, said: “We inherited a broken local audit system, not fit for purpose, inefficient, fragmented and with a massive backlog.

“Taxpayers’ expect and deserve to have confidence in the way their money is being spent locally.  A functioning local audit system is the bedrock of local transparency and accountability so we are fixing the foundations of local government as part of our Plan for Change.

“We are working in lock-step with local bodies to clear the backlog and move towards a simplified streamlined system.”

The 16 new measures follow an open consultation on the local audit strategy, which attracted hundreds of responses.

The measures build on an existing commitment to set up the Local Audit Office as an independent and unified body, which the government says will stop fragmentation in the system by co-ordinating functions spread across different organisations including the Public Sector Audit Appointments Ltd, the National Audit Office and the Financial Reporting Council.