Welsh councils could miss medium-term savings targets

14 Jun 17

Failings in medium-term financial planning by Welsh councils could mean savings targets will be missed, the Wales Audit Office has warned.

The auditor general for Wales stated in a report out today that the majority of councils in Wales have improved their medium-term financial plans, which have given them an effective approach to forecasting the savings they need to achieve.

However, more needs to be done to bridge the funding gaps they have identified.

The report states “Medium-term financial planning in councils is generally effective but shortcomings in savings planning present a risk that some councils will not achieve the savings they need to make.”

The report, Savings Planning in Councils in Wales, follows up work conducted in 2015-16 and focuses on how councils identify, plan for and deliver savings.

This included examining councils’ financial planning arrangements, the extent to which they achieved their 2015-16 savings plans and the work undertaken to ensure robustness of their 2016-17 approach.

The report found that over half of councils had well-considered and effective savings plans for 2016-17 but the others did not, and they could fail to achieve their in-year savings targets.

The main reason why specific savings plans were not achieved was related to overambitious savings targets that were not underpinned by robust delivery plans.

Auditor general Huw Vaughan Thomas said: “Welsh councils have generally managed to reduce expenditure and balance their budgets in line with austerity measures since 2010.

“However, the scale of annual budget reductions is likely to continue, so I hope that councils will consider the recommendations laid out in this report, and those included in their specific local reports, to offer realistic and robust savings proposals and meet continued reductions in funding.”

The recommendations from the report are:

 

  • Strengthen financial planning arrangements by ensuring savings proposals are fully developed, risk assessed and include realistic delivery timescales before they are included in annual budgets
  • Strengthen financial planning arrangements by developing indicative savings to cover the medium-term financial strategy period
  • Strengthen financial planning arrangements by developing an income generation/charging policy
  • Strengthen financial planning arrangements by integrating and embedding financial and corporate planning processes.

 

The report also found: 

  • All councils again delivered a balanced budget in 2015-16, but not necessarily as planned. Councils used a variety of methods to balance their budgets, which included the use of reserves, underspends from within the other service areas and unplanned income
  • Collectively, councils planned to save £251.6m in 2015-16. However the total amount saved amounted to £221.5m, 88% of that target
  • The most frequently made proposals for improvement included encouraging councils to ensure savings proposals were fully developed, risk assessed and included realistic delivery timescales before they were included in the annual budget.

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