The Department for Levelling Up, Housing and Communities (DLUHC) has appointed CIPFA to lead assurance reviews of councils at financial or leadership risk following “some recent high-profile failures”.
CIPFA has announced that it will undertake targeted external assurance reviews where the government is seeking an independent assessment of a council’s financial position as well as wider governance and leadership.
The work will help to establish a complete picture of the context, circumstances, risks and issues the local authority under review may be experiencing and provide an evidence base for what further actions may be required.
Rob Whiteman, CEO at CIPFA, said: “Soaring inflation, economic uncertainty, increased service demand and the after-effects of the pandemic have put significant pressure on all aspects of the public sector over the last two years.
“I’m really pleased that CIPFA has been chosen as the lead reviewer, which is a testament to our expertise around financial management in local government.”
David Green, strategic director at treasury adviser Arlingclose, told Room151 that CIPFA being appointed as lead reviewer showed that the “government is taking a greater interest in a small number of local authorities following some recent high-profile failures”.
Green highlighted that this could also be part of the government’s way of assessing how it will exercise its new intervention powers. The new powers allow the secretary of state to cap borrowing and direct asset sales of councils deemed to be at financial risk.
He said: “I presume these assurance reviews will inform whether government uses its new powers to intervene in the Levelling Up and Regeneration Bill.”
In the past, DLUHC has asked CIPFA to undertake assurance reviews of local authorities that received exceptional financial support from the government, such as Slough Borough Council and Wirral Council.
The government is taking a greater interest in a small number of local authorities following some recent high-profile failures.
Help councils ‘most at risk’
The Good Governance Institute and Grant Thornton LLP will support CIPFA as the lead reviewer. Phillip Woolley, partner and head of public sector consulting at Grant Thornton, said: “The financial sustainability of many councils remains precarious, and local leaders are facing a myriad of challenges, including double-figure inflation, rising interest rates and growing demand for services.
“This work represents an important step in ensuring there is a collective plan across both central and local government for helping those who are most at risk.”
Professor Andrew Corbett-Nolan, CEO at the Good Governance Institute, said: “Governance should be a productive activity, and good governance overall will be key to the recovery of local authorities which are financially challenged.
“The reviews will help local authorities establish a platform to build on and enable them to better service their local communities, whilst at the same time dealing with pressing financial issues.”
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