Information on CIPFA's Financial Resilience Index, a comparative analytical tool that is intended to be used by Chief Financial Officers to support good financial management.
What is the Financial Resilience Index?
CIPFA's Financial Resilience Index is a comparative analytical tool that is intended to be used by Chief Financial Officers to support good financial management. The index shows a council's position on a range of measures associated with financial risk highlighting where additional scrutiny may be required. The selection of indicators has been informed by extensive financial resilience work undertaken by CIPFA, public consultation and technical stakeholder engagement.
Section 151 officers may also use the index in their annual report to the council setting out the proposed budget for the year and medium-term financial strategy, in particular in preparing their statements of the robustness of the budget and the adequacy of reserves.
The data for the resilience index is obtained from the Revenue Expenditure and Financing England Outturn Report 2021-22 ("RO Forms") and reflects figures submitted by Local Authorities to DLUHC as at 31 March 2022.
While recognising some limitations in the returns (e.g. reflecting the previous financial year) they provide a consistent and transparent staring place for a discussion on financial resilience that can be tracked over time.
Why has it been created?
We know that local authorities are experiencing financial pressure as the demand for services increases, with higher costs and delivery charges impacting on budgets. Local authorities are also facing higher levels of scrutiny over their decision-making amid an increasingly complex delivery landscape. At the heart of this decision making must be a clear understanding of possible areas of financial risk.
The Financial Resilience Index is a free service and is made publicly available to support and improve discussions on local authority financial resilience. It provides a platform for constructive debate based on consistent public information.
How does it work?
The index is made up of a set of indicators which take publicly available data and compares similar authorities across a range of factors. There is no single overall indicator of financial risk, so the index instead highlights areas where additional scrutiny should take place in order to provide additional assurance. This additional scrutiny is accompanied by a narrative to place the indicator into context. This narrative is important and is essential to support a clear understanding of local context.
How do I use it?
Any upper or lower tier authority in England may then be selected and a set of comparable data will be displayed.