Long-term market and workforce development are essential if the Department is to resolve the current problems with local auditor reporting and create a more resilient system for the future. Much of the focus to date has been around short- term fixes intended to reduce pressure on the local audit system, such as changes to deadlines, deferrals to new financial reporting requirements and temporary changes to audit guidance. Longer-term progress will depend on effective market and workforce development. While PSAA’s recent procurement process secured the audit capability required to deliver local government audits for the period covering 2023–24 to 2027–28, it fell short initially and needed a supplementary bidding round. There are still too few key audit partners and other experienced staff working in the local audit market. The Department’s plans for a new qualification to support experienced audit staff to move from other sectors into the local audit sector are welcome, but we are not convinced that it will provide the numbers of skilled staff needed or quickly enough. The FRC is beginning work on a workforce plan and will be looking at routes into local audit starting with championing public sector audit among university and college leavers. The Department meanwhile is confident the new PSAA contracts should offer the certainty and commercial terms needed to enable providers to invest in staff development. It will be critical that the workforce plan also considers the development of local authority finance staff, who are crucial to the production of accounts on time. Recommendation 3: The Department should, alongside its Treasury Minute response, write to us to set out how it and FRC will ensure the market and workforce for local audit develops as needed to address existing issues, and the metrics and milestones that they will use to measure progress and hold stakeholders to account.