Local government: don’t ditch the DIPs

6 Sep 13
Rob Whiteman

Government plans to remove the requirement for a designated independent person (DIP) to investigate allegations of misconduct by senior officers may seem innocuous. But they risk the political neutrality of the chief financial officer and the financial stability of councils

In any organisation or structure it can often be the accumulation of small measures that eventually accrue to create serious and long-term problems. Though little noted so far, proposals from the Department for Communities and Local Government (CLG) to remove safeguards for local public finances could, in the long run, be such a move and precipitate a whole variety of serious problems for local government finance and governance.

The reform in question was suggested earlier this year when CLG launched a short and limited consultation, to little or no public fanfare. The consultation proposals were released under the utilitarian sounding title of ‘removing the requirement for a designated independent person (DIP) to investigate allegations of misconduct by senior officers’ and the senior officers affected by this would be the head of paid service, the monitoring officer and the chief finance officer.

This seemingly innocuous move would see the removal of a century-old defence for senior officials from dismissal without referral to an independent review. CIPFA believes that if implemented it could radically alter the relationship between senior council officials, elected council members and the public.

The reason given for this reform by CLG is that the DIP is a costly and bureaucratic requirement: if only this were true. The reality is that the average cost for using a DIP is estimated to be around £2,000 by leading law firm Bevan Brittan, who in their response to the proposals also point out that: ‘There is no empirical evidence that the cost of dismissing statutory officers under the DIP procedure is any higher than the cost of dismissing non-statutory officers.’

What the change would achieve is a dilution of good governance and an erosion of the long-held duty of the chief financial officer within local authorities to represent the interests of the ‘rate payer’ by speaking truthfully and robustly to council members when they have reason to believe the policies being pursued are financially unsustainable. Without that safety net, it will place pressure on many CIPFA members to think twice before giving their considered advice in the public interest without a fear of dismissal by the administration of the day for so doing.

Put simply it risks the political neutrality of the chief financial officer, the financial stability of local authorities and could sideline the interests of local taxpayers in favour of the short-term interests of one administration.

Local government has a different constitutional settlement to central government. While civil servants work for the government of the day and speak on behalf of their ministers, council officers are appointed by full council and work for the cabinet, all parties and all elected members. Finance officers help both the administration and the opposition prepare their budget proposals.

It is therefore a long-held protection that the whole council, not just one aggrieved party, authorises the investigation of a statutory officer by a credible independent person.

There has been no suggestion that local government finance officers do not abide by the highest standards of conduct and political neutrality. So if the government wants to change established practice, we must have an honest debate about the reasons and not dress it up that this move is about saving money.

CIPFA has been clear in its response to CLG on this matter. The proposal to remove the requirement for a designated independent person will not address any of the underlying challenges that confront local authorities. Indeed, the removal of the safeguard is more likely to exacerbate these issues in the long term.

We do recognise that there is a real need for a debate about the future of the public sector. In the year ahead we intend to advance our case that CLG and other interested groups should be focusing on reforms that will enable, rather than hinder, councils in managing their finances sustainably far into the future.

Rob Whiteman is CIPFA’s incoming chief executive

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