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A decade of austerity has changed the way organisations in local government approach financial decisions and risk. The pressures on local government came into sharp focus with the first section 114 notice in almost 20 years at Northamptonshire County Council. Now almost a year later, after a period of significant sector engagement, CIPFA is consulting on a draft Financial Management Code.
It’s important to understand this code in context, as the events of last year not only highlighted the pressure on local government, but that there was a lot of variation in the sector. While undoubtedly the ability to respond to local needs by making local decisions is a strength, there is also a need to work together as a group to ensure best practice and lessons on financial resilience are shared.
We recognised at the time the need for a proportionate professional response to provide greater support for the sector, and strengthen the position of Chief Financial Officers. This has resulted in the draft CIPFA Financial Management Code (CIPFA FM Code), which codifies some areas of local government financial management for the first time, within a principle-based approach.
While the genesis of the CIPFA FM Code lies in the wake of a troubling fiscal chapter in local government history, it is a wholly positive step forward. Never before has local government had one document to provide a professional wrap around for the range of good practice, legislation, and existing codes needed to take on the increasingly complex challenges of the profession.
Taking such action we view as necessary. All current evidence suggests that the changes needed to put local government onto a sustainable fiscal pathway will not come soon, so in the short-term local government will need to prepare to withstand greater and sustained fiscal strain.
Our stakeholder group recognised this early on in that we would not obtain immediate statutory backing for a code, with no bandwidth in parliament at the current time to allow this discussion. However what has been striking is that this sector-lead effort from CIPFA with local government has already piqued the interest of other sectors during presentations.
Many of the principles which the code is built on are universal. Better leadership, accountability, transparency, adherence to professional standards, assurance systems, and sustainability should result in better public finances regardless of your sector. However by making these explicit, and supporting these principles with standards, the CIPFA FM Code is providing local government specific support.
The CIPFA FM Code will apply to all local authorities in England, Scotland, Wales, and Northern Ireland, including police and fire authorities, as well as combined authorities. While stakeholders and the authorities that have already piloted the CIPFA FM Code have provided substantial feedback, and have shaped the current version, which has been bolstered by roadshows and presentations, we still have unanswered questions and areas to debate.
To help refine this draft into a final code that supports the sector, both now and into the future, we need people to respond to our consultation. The final version is expected in the summer during which time your feedback will have been considered in full and have influenced the outcome.
You can find the draft CIPFA FM Code for consultation on CIPFA’s website. All responses must be provided by email to FMcode@cipfa.org by 30 April 2019.
This article first appeared in the MJ.