The former chief executive of the London boroughs of Richmond and Hammersmith & Fulham, Richard Harbord argues that 2024 has not started off well for local government, with putting together a ‘sensible and lawful’ budget being ‘regrettably only the start’ of issues facing s151s.
I start my first blog of 2024 by noting that nothing much has changed, except that things may well have got worse.
The last few weeks have seen advanced communications between central and local government but increasingly no one is listening.
I have tried to work out if this is a product of it being an election year or some advanced existentialism, whereby we accept that truth and reality are constructed fictions.
Those of you who are mere youngsters will be surprised to hear that at one time the local government settlement date was fixed and known by everybody. It was the first week in December and we collected our papers from the government at 6pm in the evening. This was clearly a vital part of the training for a trainee accountant, with my deputy and I awaiting their return with great anticipation. We would then write a report for the leader and chair of policy and resources before departing home. (I should point out that this was when I first became a section 151 officer and I have experienced the current system as well).
Settlement additions
This years’ experience is not good for sound financial planning. You could normally rely on a consultation changing nothing but this year to receive more money at the end will have been difficult, although helpful beyond expectations.
On 24 January, levelling up secretary Michael Gove announced additions to the original settlement. There were some minor ones, but the two substantial changes were the £500m distributed by the Social Care Grant and a change in the funding guarantee, increasing it from 3% to 4%, before taking into account any local decisions regarding council tax. It then goes on to say, “It is not clear how much, if any additional funding will be provided to implement this guarantee”. However, the original settlement gave £196.5m to reach 3%.
The final settlement issued yesterday (5 January) still leaves this last point unresolved, although it confirms the £500m.
Regrettably there is still much that could go wrong; interest rates, inflation, achievement of savings as starters for 10 – Richard Harbord.
Section 25 scrutiny
I do spare a thought for all current section 151 officers as they prepare their section 25 reports to go alongside their budgets.
Regrettably, there is still much that could go wrong; interest rates, inflation and achievement of savings as starters for 10. For the first time, these reports will get considerable scrutiny and that scrutiny will continue if all is not well later in the year.
For instance, inflation experienced by local authorities is way above the published consumer price index. Homelessness spending grew by 26% between April and September this year and children’s and adult care placements remain high. Also, on top of this, the settlement depends on councils raising council tax as high as possible.
Oflog inquiry
However, there is more to report, with the Levelling Up, Housing and Communities Committee under Clive Betts announcing an inquiry into the Office for Local Government (Oflog). This could be very interesting, with evidence sessions expected to start soon. Submissions have a 14-point terms of reference including minor points such as Oflog’s intended purpose and its independence from the Department for Levelling Up, Housing and Communities (DLUHC).
I believe that Oflog could be of great use but at the moment there is no evidence to go on about what they intend to do or how. We were told that they were reaching out to authorities experiencing budgetary difficulties, but little else has been said as far as I am aware.
For the first time these reports will get considerable scrutiny and that scrutiny will continue if all is not well later in the year – Richard Harbord.
Productivity plans
The other point which I find unbelievable following the release of the finalised settlement was the news that by July 2024 local authorities would be required to publish “productivity plans”. These will be reviewed by a panel of experts from Oflog and the LGA and used to advise the government on best practice. It would, of course, be easier to produce these as a part of medium-term planning if there was a vestige of financial certainty.
According to the final settlement, plans must cover transformation, technology and reduction of waste.
In two recent press releases, the Local Government Association has reported that this is the fifth single-year settlement in eight years, which is far too long and unacceptable going forward. It is, I suppose, likely that whenever the next general election takes place it will interfere with these productivity plan ambitions.
External audit
The problem of external audit is another surreal matter which is not resolved. The promised regulations have missed their deadlines at least three times. In January, the government confirmed a proposed deadline of 30 September for all outstanding local authority audited accounts. If an opinion could not be given the accounts would be qualified or disclaimed. This signifies the auditor could not obtain “appropriate audit evidence”.
This seems extremely unfair and is actually no solution to moving forward for those who do not get an opinion.
Other highlights of recent weeks have been Gove encouraging authorities to use their reserves to maintain services. Thus showing a complete failure to understand the principles of reserves.
Also, the local government minister Simon Hoare suggested struggling districts should re-organise. In the long term that may be a consideration but to suggest that just as part of the current financial difficulties debate seems unhelpful.
Putting together a sensible and lawful budget is regrettably only the start of the continuing difficulties, with the added pressure of the next general election potentially playing havoc with the timetable for 2025/26.
Richard Harbord is the former chief executive of Richmond and Hammersmith & Fulham councils.
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