I have always felt that the public sector is remarkably well-run in spite of the difficulties it has faced over the last decade. Over the last ten years, local government in particular has endured punishing levels of fiscal austerity. Despite this, public finance professionals in local government are among the most creative, resourceful, and innovative individuals I’ve ever had the pleasure of working alongside. As a result, it is unsurprising that they have largely used this fiscal pinch to entirely transform how services are delivered. Local government today looks fundamentally different to how it looked ten years ago, and yet the 2019 Performance Tracker indicated that during this time, there has been only a small decline in residents’ satisfaction with services.
That isn’t to say that hard decisions haven’t had to be made. Budgets have been slashed, services have been cut back and, notably in Northamptonshire in 2018, we saw the issuance of a Section 114 notice, as the council was unable to balance its budget.
Balancing the budget is a statutory duty for CFOs of local authorities. It involves a whole series of decisions and scenarios based on well evidenced data, taken in consultation with the leadership team. We should not be dismissing the likes of Leeds City Council when they start to talk of being unable to meet these duties. We should be sitting up and taking notice.
However, at CIPFA we firmly believe that the issuance of a Section 114 notice in any area at the current time would be counter-productive. The last thing our communities need is a freeze on spending during a public health crisis. The pandemic has exponentially increased the pressure on already strained local government finances, with increased demand in social care, reduced income from fees and charges, as well as reduced taxable income. At the same time, local authorities are also being expected to administrate central government funds, like the Infection Control Fund, from which they themselves largely do not benefit. Freezing spending on top of these pressures will only reduce councils’ ability to deal with the crisis at hand, and deepen pre-existing vulnerabilities and inequalities in communities.
This is why CIPFA has new guidance around Section 114 notices. At this time, it is essential that local government and its key partners, including those in central government, respond jointly to the current challenges.
The modifications to CIPFA’s guidance do not change the statutory duties of the CFO. Instead, they are designed to create an opportunity, within existing statutory limits, to enable an exploration of what further options and/or financial assistance may be available. The temporary changes are:
The effect, in practice, should mean a S.114 report will not need to be issued while discussions with the government that would address the issue are in progress.
This development represents one more way that CIPFA is continuing to fight for the sector’s interests at the central government level. We are clear that Section 114s are a very real risk at the present time, and we will do all we can to support CFOs as they work with their leadership team to build a sustainable financial plan. At the same time, we will continue to lobby government to provide the full financial support required for local authorities to effectively fight this crisis.
This article first appeared in LGC.
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