Gemma Bell argues councils need automation fit for the 21st century.
The findings of the recent Public Accounts Committee (PAC) report into local government finance included a stark conclusion that “Government support schemes during the pandemic were not always designed with sufficient knowledge of local government finance”. In particular, support schemes were acknowledged to have been designed with too much bureaucracy and a lack of coordination.
To those with many years of local government experience under your belt, the comments on bureaucracy may not come as a surprise. We are asked to submit and provide data on an almost weekly basis, and none are possibly more crucial to our financial planning than the collection fund returns.
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The 2021-22 NNDR1 consisted of ten separate tabs of an excel spreadsheet and came with 61 pages of guidance. This is a huge technical undertaking for any billing authority with the accuracy of the return impacting all precepting authorities.
Our executive director for finance and assets wrote here in June 2021 about the importance of finance leaders sitting at the top table. We are in the process of launching a finance apprenticeship to start in September and have recently brought in two finance business partners with no previous experience in the sector. They are exceptional individuals who have thrown themselves into building great relationships whilst providing constructive and valuable challenge to our budget holders.
The question is, how do we keep such talent engaged and motivated when the most significant of our funding streams and the basis for sustaining our service delivery is so fraught with complication and risk of error?
This was particularly brought home to me last week when a local government technical accounting stalwart in our team with over thirty years of experience cried in exasperation, “If I can’t explain this, how is anyone else going to be able to pick it up!”
Simplifying the calculation
On paper, the calculation of business rates is simple: we know how many businesses we have, their rateable value and how the collection is shared between the precepting authorities.
The NNDR returns translate this into tens of cells which each require a separate entry supported by its own workings spreadsheet of multiple tabs.
Some of the reliefs and adjustments are now so historic that there is only a small number of professionals who are still in the sector and remember their initial introduction. As a result, when someone new looks to understand why we do something, the response quite frequently becomes lost or unexplained.
Is it time we reviewed the calculation from the bottom up—both the how and the why entries are presented as they are to increase the collective knowledge and understanding of all our finance professionals, regardless of how long they have worked in local government?
More automation, less errors
At the same time I was dwelling on this last week, we received an email from MHCLG reporting an error in the formula guidance within the income guarantee calculation which had been prepared with the NNDR3 form.
Luckily, this had only a minor impact for us at Cheltenham but it does raise a valid issue about the risk of manual errors occurring during the completion of the returns in their current form.
I can’t imagine the conversation we are going to have with our new apprentice, fresh from their A Levels and having lived their entire lives in the age of the internet and automation; where bills are paid, food is ordered and central heating is set from our phones. Yet nearly 25% of our funding as an authority could be impacted by something as seemingly insignificant as carrying a formula over incorrectly. It’s going to make me feel extremely old.
The pandemic has cast doubt on planned financial reforms to funding in the sector which were centred on greater local retention of business rates, with local authorities expecting to collect £1.6bn less in business rates in 2020-21 than planned.
In light of the recommendations made in the PAC report about more certainty over medium-term funding arrangements, should we also take a more strategic view of how sustainable the current processes are for key funding returns in the light of succession planning for future finance leadership?
Rather than tweaking reliefs, allowances and support grants in the NNDR and council tax returns and forecasts, let’s bring the method of calculation into the 21st century, allowing billing authorities to refocus their resources on key corporate priorities and reducing the risk of huge knowledge gaps created when experienced staff are no longer able to support.
Gemma Bell is head of finance at Cheltenham Borough Council.
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