Counties query plan for financial resilience index

19 Jul 18

CIPFA’s proposed resilience index for English local authorities will be a “blunt instrument” that will do little to alleviate financial pressure, county chiefs have claimed.

The institute is currently consulting on an “authoritative measure” of local authority financial resilience based on publicly available information. The resulting index will provide an assessment of each council’s relative financial health.

But the County Councils Network and the Association of County Chief Executives today issued a statement saying the index would not help local authorities tackle the main problem of insufficient funding.

Richard Flinton, ACCE lead adviser for local government finance, and chief executive of North Yorkshire County Council, said: “Councils’ future financial stability has been a recurring theme in local government this year, and these well-meaning proposals are unsurprising in the current climate.

“However, we believe they will be a blunt instrument, which over-simplifies complex issues and offers no genuine solutions to councils’ financial issues.”

The county chief executives argued that as financial resilience can be calculated in a number of different ways, using a variety of different indicators, it might be difficult to get a wholly accurate picture on how well a local authority is performing.

County chiefs suggested other factors such as organisational culture, local democratic accountability, the historical approach of a place and the importance and dependency of working with partners in a locality.

Flinton added: “Naming and shaming local authorities, based on a particular dataset, could be counter-productive in the long term when we should be looking at how, and where extra support to specific local authorities can be provided.”

The ACCE, which represents more than 30 large English upper tier and unitary authorities, said it was looking forward to engaging with CIPFA during the consultation period.

CIPFA chief executive Rob Whiteman, however, rejected the idea that CIPFA were ‘naming and shaming’ councils and added: “We do believe it is our professional duty to provide objective advice to authorities at risk in order to help stabilise their financial position whilst there is still time.”

He continued: “We will listen to these concerns and have set a lengthy consultation period before responding in the early autumn, but the status quo is not an option given that the trajectory of tax, spend, savings and reserves may not be sustainable for local authorities.

“Our approach will always be a collaborative one, but we cannot remain silent when there are material risks.”

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