Tory MP Derek Conway isn’t the only public figure facing scrutiny over the management of their finances. Finance directors will have been waiting nervously this week to hear the Audit Commission’s verdict on their stewardship of council coffers.
And the news was pretty good. In fact, according to the Local Government Association, it was a ‘ringing endorsement’ of authorities’ efforts to get a better deal for the taxpayer.
The annual ‘use of resources’ analysis showed that more than nine out of ten councils were meeting the minimum requirements, while the number of top-performing authorities had almost doubled in a year.
Commission chief executive Steve Bundred declared himself pleased that more councils were performing at the highest level for each of the use of resources themes – financial reporting, financial management, financial standing, internal control and value for money.
However, he did admit to one area of concern. Thirteen per cent of councils were below basic requirements in the financial reporting theme, compared with only 6% a year earlier.
This is clearly a worrying trend and might be a result of the many changes that council FDs have had to accommodate over the past few years. They will need to work hard to turn this around, especially as we move to International Financial Reporting Standards.
Central government has already attacked high-spending councils and will no doubt be tempted to use the commission’s report to berate them further, but it would do well to look in its own backyard.
As the Institute for Fiscal Studies pointed out this week, we are about to enter a very difficult phase for the public finances. The chancellor will need to raise another £8bn in taxes in the Budget to keep public sector debt below the government’s self-imposed limits.
There are threats to Labour’s child poverty target, the health service and council tax levels if ministers cannot find some additional funding.
All of which suggests the need for greater financial scrutiny right across the board – from Whitehall to town hall.
