Introducing a UK equivalent of the US’ National Resource Network programme could solve the problem of local authorities in financial distress.
And it could be set up and operational in three months, according to US public sector financial advisory firm PFM.
The firm believes that the UK’s system of using section 114 notices to balance a budget or reduce spending is “systemically flawed” as it only addresses issues after they become too severe to be easily resolved.
Instead, the National Resource Network (NRN) programme provides a better framework, PFM said, as it offers a “systemic response” to a systemic issue. A similar programme in the UK “would fix key structural issues in individual councils, prevent financial distress, save taxpayers money and reduce damaging cuts to services”.
The NRN was launched in 2013 in the US in response to high-profile bankruptcies. It helps cities facing financial distress and drives economic development and regeneration, PFM said, offering long-term solutions.
The multi-layered programme has been used to resolve financial distress at authorities such as Baltimore City Council; initiate financial recovery in places like New Orleans, following Hurricane Katrina; and solve regeneration issues.
The NRN is designed to tackle issues before a local authority faces financial distress. According to PFM, the NRN “compels local and central government to work together for structural change” and creates a class of local authority leaders “who can deliver consistent results with the resources available to them”.
In a roadmap for solving UK local authority financial problems proposed by PFM, a UK equivalent of the NRN would intervene where an s114 notice has been issued to provide a “consistent and systematic response”, replacing the “current ad-hoc approach”.
It would also concentrate expertise in a body that is “transparent and accountable”, and deliver “necessary improvements to council skills, culture and performance”.
The NRN programme operates under the basis that local authorities tackling deprivation and high unemployment cannot cut their way to economic growth.
PFM pointed to Pittsburgh as an example of the NRN’s success, where the programme was used to restructure the city’s finances and ultimately led to regeneration. Best practice taken from Pittsburgh and other successes can be applied in a new approach to economic development and regeneration in deprived areas of the UK, PFM said. This could deliver “lasting economic growth and employment”, the advisory firm added.
PFM currently advises US cities including New Orleans, Washington DC and Philadelphia as well as smaller local and regional governments.
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