CIPFA warns on impact of DIP reforms


By Vivienne Russell

First appeared in Public Finance on 27 January 2014 

CIPFA has reiterated its opposition to a government proposal to ditch the independent protection against dismissal offered to council Section 151 officers, warning that it could undermine the post’s statutory responsibility to ensure financial probity.

In a consultation, which closed in March last year, the Department for Communities and Local Government proposed dropping the requirement for a Designated Independent Person (DIP) to review cases before senior officers holding statutory positions are dismissed. The department has yet to formally respond to the consultation.

In a letter sent to DCLG on January 10, CIPFA chief executive Rob Whiteman re-stated the institute’s concerns about the effect and timing of the proposed change.

He noted that Section 151 officers had a fiduciary duty to act in the interests of local taxpayers.

But, he went on, the current financial pressures being placed on local authorities and the need to ensure decision-making takes account of long-term financial implications was increasingly likely to lead to a ‘divergence of views’ between members and officers.

‘The potential for conflict between financial imperatives and political priorities makes it essential that Section 151 officers have adequate protection in the exercise of their statutory functions, so that they can carry out their statutory duties without fear or favour,’ Whiteman wrote.

He added that the financial assurance provided by Section 151 officers was important not only to local taxpayers, but also to Parliament.

‘Indeed, DCLG’s own accountability statement to Parliament relies heavily on the statutory role and independence of the Section 151 officers and we feel it is vital that the department continues to support them in their role.

‘I am bound to ask the question, “What is the problem this change is seeking to address?’ We of course recognise that DCLG remains committed to the Section 151 role and provisions, but CIPFA would argue that any change should be on the basis on ensuring that role can be executed properly, rather than taking a risk to undermine the execution of these duties for an unclear reason that has not been raised by professional bodies or commentators.’

Last September, a senior local government lawyer told Public Finance that that the proposal to drop DIP protection could lead to a spate of employment claims.

Sarah Lamont, of law firm Bevan Brittan, said model contracts had been built around the DIP procedure and any reforms would require individuals to agree to a contractual change. Councils could be sued for failing to follow an expressed procedure, she said.