Chief financial officers (CFOs) should not expect to automatically be part of their councils’ senior management team, according to the chairman of the Local Government Association.
Last week, a new draft Financial Management Code released by the Chartered Institute of Public Finance and Accountancy (CIPFA) said CFOs must be at the “top table” of local authority decision-making to prevent budgetary failure.
However, speaking before Parliament’s Public Accounts Committee this week, which is conducting an inquiry into local government finance, Lord Gary Porter said that the suggestion was unrealistic for many councils.
He told MPs: “I am not aware of there being any issues around that other than people who do that for a living get upset they are not sitting at the top table, but similarly we have some people who are doing planning who are upset that they are not sitting at the top table.
“Given the financial restraints we are all under it is not possible to have 10 people in a small district sitting at the top table.
“It would be an insane waste of public money.”
However, giving evidence during the same session, CIPFA chief executive Rob Whiteman cited a National Audit Office report from January which had cited concerns that section 151 officers operating at lower grades “may be less able to bring influence to bear on material decisions”.
Whiteman said this meant that “there is a risk that people will be bullied into giving the advice they want on buying a shopping centre or signing off some cuts. That is a risk and that worries me considerably.
“It is not something one sees in other sectors.
“You don’t see in health or in the corporate sector organisations facing pressure and say ‘the best way we can deal with this is by relegating the role of the finance director’.”
The theme has been revisited on a number of occasions by CIPFA.
In December, it highlighted that a local authority’s CFO is not always a board member – a practice which it said is “out of kilter with all other major organisations in the public and private sector”.
During a robust performance, Lord Porter also defended local authorities for taking a more commercial approach to raise income for services.
He said: “The government couldn’t have it both ways. You couldn’t expect us to do more, give us less and then say don’t take any risks.
“I have seen criticisms about councils being more entrepreneurial but, as a taxpayer, would you rather have your elderly relatives or your children looked after in good and safe systems where the council has managed to get the money for that from someone else or would you rather your child or elderly parent was at risk of dying?
“We do take risks, but the risks for the people we look after are greater if we don’t take them.”
Also appearing before the committee, Melanie Dawes, permanent secretary at the Ministry of Housing, Communities and Local Government, counselled against the government taking a significantly larger role in policing the governance of councils.
She said: “It is interesting that over the last few years there is a lot more complexity in partnership arrangements, with innovation going on in commercial structures and so on.
“The more localist approach that the government has taken towards governance has gone hand in hand with that and I think that is appropriate.
“The more complexity you have at a local level the more we need to be careful about relying on national frameworks that can, if we are not careful, assume that everyone is the same and miss the risk and miss the issues.”
