The Index
What are the aims of the index?
The Financial Resilience Index is an analytical tool intended to support a high-level understanding of a local authority's financial resilience. It aims to help councils recognise potential signs of risk to their financial stability.
How does this support councils to improve their resilience?
The index provides a platform to facilitate constructive dialogue between those charged with decision-making and governance. It uses past data to support medium term financial planning.
Why is there no single overall indicator?
This data is not a predicator of failure. It does not produce a league table based on a single risk measure, as CIPFA does not believe that such a measure exists.
Why are only statistics for England available?
The current version of the index is focusing on England only. We are looking into supporting other areas where appropriate in the future.
Can we use it to tell which authority will be next to issue a S.114 notice?
No. There are a multitude of factors that can impact the decision to issues a S.114 notice. It is important to understand the local narrative that will accompany this data. This model offers a transparent source of data to support Section 151 officers in their duty to employ good financial management.
Will this be updated next year?
We update the resilience index on an annual basis, but the release date may vary to reflect the published data from the Department for Levelling Up, Housing and Communities (DLUHC).
The indicators
Who decided my nearest neighbours?
CIPFA maintains a model that generates sets of statistical nearest neighbours. The default model uses 20 factors including demographic variables, deprivation, employment and population density.
Why does my district not have a social care ratio?
District councils do not have responsibility for social care.
Why is there no children's social care judgement for my authority?
District councils do not have responsibility for social care, which is why this has not been included in the index.
Why does the index use a number of different denominators?
The use of the different denominators reflects the discussions of the working group to provide greater accuracy. The denominators are total service expenditure, net expenditure and net revenue expenditure.
My reserves sustainability measure is the same as another authority, but the graph makes me appear higher risk?
In instances where authorities perform identically against both this indicator and the change in reserves indicator, they are presented on the graph in alphabetical order.
Why is the model based on provisional data from 2020-2021?
The data released from DLUHC on 9 December 2021 did not have a full set of returns, with 24 local authorities having not provided their information. For this reason, DLUHC labelled it provisional. As the data from local authorities that did submit was accurate, CIPFA decided there was sufficient information with which to publish the index.
The data
Where is the data from and is the raw data available?
The underpinning data is publicly available. CIPFA has not used any data provided specifically by councils. The primary data source is the Revenue Outturn data set compiled by DLUHC. Because these data sets are readily available, CIPFA will not supply the raw data.
Why does the value for money appear for some and not other authorities?
CIPFA is aware that strong governance plays an important part in resilience. However, the Value for Money (VfM) judgement is now a narrative rather than a definitive judgement. We have therefore chosen to signpost relevant sites where information on this area of performance will be available.
I think my data is wrong. Who can I contact?
The financial data used in this index is all publicly available and should therefore be correct. The children's social care judgement may be outdated as a result of COVID-related delays. Any queries can be sent to analytics@cipfa.org.
COVID-19
How did COVID-19 impact the index, based on the 2019-2020 data?
2019-2020 was not materially affected by the pandemic, as the data cut off was 31 March 2020. Therefore, it provides a useful pre-COVID baseline, showing the resilience of councils as they entered the pandemic. This data publication was delayed until February 2021 due to the impact of COVID-19. We did not net off the additional payments that were received in late March 2020: neither the first tranche of funding in response to the pandemic, nor the business rates relief. These were treated differently within the RO data for different local authorities. Local narratives were produced to cover variations, such as if reserves increased.
How did COVID-19 impact the index, based on the 2020-2021 data?
There have been additional payments made to local authorities in response to the pandemic. The RO data returns have been updated to reflect these payments. However, local authorities have not taken the same approach when completing the data returns. Some have identified these payments in separate column others have not separately identified them. We have therefore used the data as it has been provided.
We are aware that due to the timing of these payments and following accounting practice some of this funding is reflected in an increase in reserves. It is therefore important to use the local context to provide additional information.
Sales fees and charges
The index considers that where an authority had a high proportion of sales fees and charges against the council's total service expenditure, it has better flexibility and therefore is at less risk. During the pandemic we are aware that this was not the case, but consider over time this position to be correct.
Treatment of Direct Schools Grant deficits
From our discussions with the Resilience Index working group, we are aware that the RO form does not provide a clear picture on Direct School Grant deficits where a reserve is required. The Dedicated Schools Grant reserves level (line 913) is not used; we only use other earmarked and unallocated in the reserves indicators.