The Department for Communities and Local Government (DCLG) has been warned that it needs to improve the way it captures, analyses and uses data in order to ensure that local authorities remain financially sustainable.
In a report published today, the Commons Select Committee said that it was "concerned" that the department appeared to be complacent about the risks to local authority finances, council tax payers and local service users arising from the increasing scale and changing character of commercial activities across the sector.
It said that the department "does not have good enough information to understand the scale and nature of authorities' commercial activities or which authorities are placing themselves at greatest risk".
This suggests that the department is not collecting enough of the necessary data, and that the quality of the data that it is collecting is not up to the standard required.
The committee goes on to say that the department "does not use the information it does have to give it a cumulative picture of risks and pressures across the sector" suggesting that there is room for improvement in how the data is both analysed, and then acted upon.
Currently, the department relies on a devolved framework that gives it assurance about the short-term sustainability of individual authorities, but the committee claims that the framework does not identify issues across the sector.
Despite this, it said the department does not use the data it collects effectively to build its own system-wide picture of trends across the sector and carries out limited analysis related to capital expenditure.
"The department's current understanding of risks across the sector, such as the deteriorating condition of capital assets, is not sufficient," it said.
However, it added that the department accepts that in future it needs to monitor trends and developments in the sector more actively and to be more intelligent in the way that it identifies trends in the sector.
The improved use of data is just one of the committee's six recommendations for the department.
