Finance chiefs may be longing for time off but unfortunately there is a long list of issues still awaiting their attention. Andrew Hardingham offers a checklist you probably don’t want to read.
“We’re all going on a Summer holiday”, the song goes but maybe in this modern Covid world, the lyrics should be updated to “We’re all goin’ on a summer staycation”! It doesn’t have the same ring to it but, intrigued by this new word that seems to have crept into our lexicon, a quick search on Google revealed its meaning “a holiday spent in one’s home country rather than abroad, or one spent at home and involving day trips to local attractions”. A thought: does a visit to the office count as a local attraction?
Let’s put that aside. Before the bags are packed for holidays, we need to ask what is in the “in” tray? In no particular order, as they say…
There remains outstanding a number of government reviews into local authority funding required to a reset the way local councils are funded and the mechanism for the distribution of funding. Covid 19 has drawn into sharper focus the financial challenges faced by local authorities which, let’s be honest, have existed for some years.
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The spending review, promised for a number of years now, should be underway by September. We await to see the proposals for local government financial reform and the impact of grant distribution on medium-term financial plans.
Has the “Fair Funding” review been kicked into the long grass? It appears the funding cake is getting smaller but the intensity of debate as to who gets what share grows.
Covid
The “in” tray will still have plenty relating to Covid. We will continue to be concerned about the affect of Covid not only on budgets but on service demand and delivery. What will we have to redesign; what will it cost (or save?); how will the Collection Fund unfold as we deal with falling tax bases but, hopefully, recovering collection rates; the impact of managing the deferral of losses; the impact on council tax support scheme claimants growth and how this will this impact on the tax base calculations?
How much will recovery cost and what will it look like? In the financial year 2020-21, the government has largely funded additional costs incurred by the sector as a result of the pandemic and provided considerable support to make up for income losses. But what is the real impact on local council budgets?
Maybe one issue rising to the top of the pile is how to deal with surplus assets, in particular office buildings? Will staff be returning to the office? What will future working patterns look like?
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Local authorities will be anxiously looking at balance sheets, at the cost (or rewards) of holding property. Are there opportunities for disposal to save revenue costs? Will everyone selling and no one buying? Will we have to impair? What’s the debt position? What is the ROR? Can we afford to hold? Can we afford to dispose (at a loss)?
It has always been a mystery to me why office assets are not better utilised. Typically, offices are occupied from Monday to Friday and maybe, if we are being generous, for 12 hours a day meaning they stand idle for over two thirds of potential occupancy. Could we reshape working patterns? Why can’t we have 24/7working?
Budget
Will the next budget balance? Section 25 of the Local Government Finance Act 2003 requires that, when a local authority is agreeing its annual budget and the council tax precept, the chief finance officer must report to the council on the robustness of the estimates made for the purposes of the Council Tax requirement calculations and the adequacy of the proposed financial reserves.
Somewhere near the top of the in tray will be the Prudential Code review, capital framework and considerations about borrowing to invest. Will this lead to a rewrite of the TM and capital strategy? How will this impact on the councils capital and revenue budget? What sources of borrowing can the council tap into? Is the PWLB still the first source of funding?
Also in the tray will be considerations about SEND and DSG. The deficits are building whilst we await the outcome of government deliberations. Will council’s get financial support or will the deficits have to be covered by reserves? How do we work with children’s services directors to reconfigure to save costs?
Financial controllers and technicians will be concerned over statement of accounts and audit sign off. Will there continue to be delays, are auditors up to the task and what will the new Audit Annual reports be saying?
The tray will also be full of issues about the financing of place – the levelling up agenda, regeneration, town centre recovery, devolution and reorganisation, commercial issues including company governance, trading and investment, the Environment Bill and carbon net zero plans.
So as FDs pack, lock the case, check the passport, complete the locator forms, take the PCR and lateral flow tests, ensure vaccination records are in order…we leave the “in” tray and hope to head off “to where the sun shines brightly… . To make our dreams come true”. Maybe we will return to a world where local government finance will be a better place and the in-tray less daunting.
Andrew Hardingham is former service director for finance, Plymouth City Council.
Photo by Belinda Fewings on Unsplash
Photo by Nick Page on Unsplash
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