One in four councils in England is yet to publish their draft accounts for 2021/22, according to analysis from local government finance expert Dan Bates.
Speaking at Room151’s FDs’ Summit, Bates said that 81 of the 331 authorities in England had yet to publish their accounts despite a deadline of 31 July. The 81 included some “well-known strugglers” he told delegates, but also some unexpected names.
“That is a really big problem,” he said. “If there is a lot of stress in the sector and we can’t see what is happening, then we are underestimating those that are struggling.”
Bates, finance specialist at LGImprove, described the government’s approach to problems with council finances as “very short term” in the use of intervention teams and capitalisation directions.
Any Fair Funding Review would not now take effect until “2026/27 at the earliest”, he predicted.
Bates also claimed that councils had some explaining to do in regard to the growth of reserves across the sector.
“If you remove the impact of Covid reliefs, reserves have gone up across the sector by about 35% [over the past two years]. So there is a narrative that we need to explain as to why that is.”
However, Bates told Room151 that “it seems certain that reserves will fall significantly over the next year as councils grapple with demand and inflationary pressures”.
He said there were already 20 to 30 councils with a weak and falling level of reserves. “A low level and depleting level of reserves is a warning sign in terms of potential [section] 114 notices,” he added.
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