Clark confirms council efficiency checks in return for four-year finance deals

6 Jan 16

Greg Clark has confirmed councils will need to set out efficiency plans if they are to qualify for four-year financial settlements from next April but said he does not intend these to be “heavy handed” assessments.

Speaking at the Local Government Association’s annual finance conference in London today, the local government secretary said the move to offer minimum spending levels for every year until 2019/20 would place “significant constraints on the national government’s flexibility to deal with future ups and downs in its finances”.

As a result of Whitehall conceding something “very significant”, it had been decided to ask for town halls “to demonstrate they have got plans to make themselves more efficient during that period”.

Asked by Public Finance what would be required, Clark said councils would need to show how the spending certainty would be of “mutual benefit of your residents and our citizens”.

He added: “The argument I was able to make, and prevailed, was that if authorities know what is in store for them they will be able to plan ahead more rationally, they will be able to use resources more dependably and this creates the very efficiency we would like to see across government.”

Given this, he said that “it seemed a reasonable suggestion” to ask councils to set out what efficiencies could be made.

“So we have agreed it, and I will do it in a way that is consistent with the approach that we have taken, which is not to have a 100 page checklist of what you need to demonstrate. But what I would expect from any authority that wants to take up this offer – and as I say it is an offer not an imposition – to say how you will make use of this for the mutual benefit of your residents and our citizens. This is the way we will approach it, it is not intended to be heavy handed.”

Also speaking at the conference, the LGA’s deputy chief executive Sarah Pickup called for local authorities’ medium-term financial strategies (MTFS) to be used as the basis for efficiency plans.

“I think we all push very hard to say councils have medium-term financial strategies and they have to have efficiency plans in place on how they’re going to finance budgets over four years,” she said.

“What there might be is a need for a bit more detail, and you might need to specify at least in outcomes, but I would push very much for the MTFS to be the basis of that.”

Responding to Clark's comments, CIPFA chief executive Rob Whiteman highlighted that unlike other areas of the public sector, local authorities already have a statutory duty to balance their books.

“Authorities’ medium term financial planning, which is open and transparent, already includes efficiency planning. Any additional reporting requirement in return for certainty about future funding arrangements should not be too onerous. This is a good policy that the government should be proud of delivering, there’s no need for extra red tape.

“What we do need is clarity around the government’s expectations for non-efficiency savings and decisions about local authority reserves.”

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