Councils given guide to managing the spending cuts

7 Sep 10
The Audit Commission has produced a practical guide to help council chief executives and finance directors cope with the looming spending squeeze
By Vivienne Russell

8 September 2010

The Audit Commission has produced a practical guide to help council chief executives and finance directors cope with the looming spending squeeze.

The report, Strategicfinancial management in councils: delivering services with a reduced income, published today, is aimed at all council staff and councillors, but particularly those controlling spending.

Based on an examination of 42 financial plans across 34 local authorities, it points out potential financial pitfalls, highlights success stories and includes a value-for-money self-assessment questionnaire that can be applied locally.

Audit Commission chief executive Eugene Sullivan said high-quality planning would help councils negotiate the trade-offs between making service cuts to meet the present fiscal challenge, and preserving a long-term capacity to deliver essential services.

He added that he hoped the commission’s guide would help councils to help themselves.

‘Our report sets out important principles for managing council finance sustainably. It was compiled with the help of councils that take a long-term view of managing finance.’

Case studies of good financial management are included in the report. One example is a metropolitan district council that reviewed its entire spending from scratch to see how well it matched national and local priorities. As a result of the changes suggested by the review, the authority’s council tax fell from one of the highest in the country to the thirty-seventh lowest over seven years.

Another case study is of a county council that will save £29m this financial year by closing a funding gap. The council plans to save £88m over three years, with minimal effect on frontline services, through better procurement, an internal restructure, the introduction of a new HR and payroll system and a reduction in corporate services spending.

A self-assessment questionnaire included in the report is based on the government’s questions for Whitehall departments in advance of the October Spending Review. Questions for councils include whether activities are essential, whether they need to be funded by the council and whether they can be provided by the private sector, third sector or citizens themselves.

Sullivan said: ‘The paper and its questionnaire should stimulate debate and discussion about the mechanisms and culture of councils, to get them in a fitter state for the future.’

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