By Richard Johnstone | 28 February 2013
The number of councils concerned about the impact of Whitehall policies has doubled in the last year, an analysis by Grant Thornton has found.
Improving council governance, published today, examined the annual governance statements of 153 unitary and upper-tier authorities in England in 2012. These explain councils’ governance arrangements and how they manage the risks of failure to achieve strategic objectives.
The report found that central government’s spending cuts and policies, such as the localisation of business rate revenue and Council Tax Benefit, were considered the biggest risk to authorities’ strategic objectives, with 105 highlighting it as an issue. This is more than twice the number of councils that raised similar concerns the year before, when it was mentioned in governance statements just 46 times.
Grant Thornton’s public sector governance director Paul Hughes said last year’s statements showed Whitehall reforms were a ‘major issue of concern’.
Hughes told Public Finance: ‘The effect of government policies means dealing with the impact of the spending reductions, changes around the Universal Credit and business rates localisation.’
The report included the results of a survey of 64 senior council officers and members. This revealed that the number of leaders and senior officers who feared that their authority’s relationship with external contractors was unclear has doubled in the last year.
Risks associated with greater use of contractors to provide public services was a ‘particular concern’, the survey found, as councils changed the way the delivered services in response to spending cuts. The survey also revealed that 21% of respondents did not believe their roles and responsibilities are clear when services were outsourced. This is up from 11% last year.
In addition, council leaders’ confidence about their authority’s ability to identify risks to services has fallen in the past year. Although it remained high, at 87%, this was down from 98% in last year’s survey.
The report concluded that the survey results were ‘disturbing’ when so many authorities are currently outsourcing services. Hughes said the findings indicated there were ‘some real challenges’ for councils.
‘Councils can’t salami slice their way out of the Comprehensive Spending Review [funding reductions], so they’re trying to be more creative in their services,’ he said.
‘So we are going into a time where there’s going to be a lot more of that, which needs accountability for the public pound. Councils being less sure in their ability to do that is quite significant I think.’
Ensuring appropriate scrutiny of taxpayer money in such deals is also an issue, he added.
‘Councils know there needs to be accountability for public money. One way is for councils to say that a firm is delivering that service, we are not accountable for it, and that would be wrong. But the other way is replicating the in-house checks and balances, which is going to be impractical. There isn’t a simple solution.
‘But councils have to be very clear with themselves and members about what the governance relationships are for these arrangements.’
