finance directors losing confidence in ability to deliver local services ahead of spending review

23-11-2015

Confidence in councils’ ability to keep delivering services amid ongoing government budget cuts has continued to fall sharply among chief financial officers (CFOs), according to a survey by the Chartered Institute of Public Finance and Accountancy (CIPFA) published today.

The Institute’s survey of CFOs found that almost half (49%) were less confident in their ability to deliver services for the next financial year (2016-17) than a year ago. The proportion of respondents who were less confident has increased from 41% of CFOs last year for 2015-16 and 27% for 2014-15.

CFOs were also asked how confident they were over their organisation’s overall financial position. Some 56% of respondents polled across 237 authorities said they were less confident over their organisation’s position for the next financial year (2016-17) – up from 44% for 2015-16 and 20% for 2014-15.

When asked to name the services under the biggest pressure, more than 95% cited adult social care, 94% children’s social care, 44% environment and regulatory services and 37% housing.

CIPFA has identified the key areas of concern for local government which the Institute hopes will be addressed by the Chancellor in Wednesday’s Spending Review. These include:

  • Full retention of business rates is welcome news for many local authorities but the government needs to urgently clarify how high-need authorities will be supported.
  • The extension of the Right to Buy scheme may mean there is less social housing stock available.
  • Adult social care is one of the areas under the most amount of pressure. It is unclear how further cuts can be made without further impacting on this service.
  • The cost of introducing the National living wage needs to be factored into any funding decisions, particularly in relation to health and social care.
  • Some councils will need extra support from the government if they are to avoid using their reserves to plug short term funding gaps. Reserves should instead be used to safeguard future services and to protect against risks.
  • The Government must commit to public health budget increases above inflation each year, to help the system move towards prevention, rather than simply funding remedial care.

Rob Whiteman, Chief Executive of CIPFA, said:

'As our survey makes clear, deep and ongoing budget cuts and increased demand mean that local authority finance directors are rapidly losing confidence in the ability of their organisations to deliver essential services.

While this will come as no surprise to many in the sector, it should set alarm bells ringing across government as more and more councils struggle to balance the books with some authorities now facing a fiscal cliff.

'The government urgently needs to acknowledge this in the Spending Review and adopt a long-term public sector wide approach so councils can be funded in a fair and sustainable way if they are to avoid financial failure.'

ENDS

Notes to editors

The findings were published as part of the Institute’s Pre-Comprehensive Spending Review briefing paper which examines some of the stark choices facing local authorities and other public services.

In the briefing, CIPFA identified the key areas of concern for local government which the Institute hopes will be addressed by the Chancellor in Wednesday’s review.

For media enquiries contact the CIPFA press office on 078 1857 0782 or email E: Saskia.black@cipfa.org.

CIPFA sent questionnaires to 442 local authorities in England. This includes councils, police and fire authorities, transport authorities, water authorities and national parks. Overall 237 questionnaires were returned giving a survey response rate of 53.6%.