“New PM given stark warning over future of local councils”

“The next prime minister has just 100 days to “save” local government, a think-tank has warned.

In their first 100 days, the new leader must provide a one-year emergency settlement for local government, drop the council tax referendum requirement and come up with a strategy for health and social care funding.

These are the recommendations from the Local Government Information Unit think-tank, whose Local Finance Taskforce paper was published today. The report is based on evidence taken from 254 senior figures in local government.

Jonathan Carr-West, chief executive of LGiU, said: “The next prime minister will have 100 days to save local government when he is elected on 23 July.

“At the moment, councils have no idea how they will be funded this time next year. They face a financial cliff edge on 31 March 2020 and currently have no ability to budget or plan their services for the year ahead.

“Some may soon be forced to take very difficult decisions, based on their worst-case scenario budget estimates – making redundancies, stripping down services, selling valued public assets – that may turn out to be completely unnecessary.”

LGiU noted, from its previous research, that one in 20 councils fear it will be unable to fulfil statutory duties this year, while one in 10 expects to face legal challenges due to service cuts.

The think-tank called on the next prime minister to set out a plan for local government finance that considers overall quantum, uncertainty and risk, adult social care, business rates, council tax and other sources of funding.

On business rates, LGiU noted that despite a commitment to moving to 75% business rates retention by 2020, there is still little detail on how this will be redistributed, and called for a strategy to published “as a matter of urgency”.

The council tax referendum threshold – whereby councils must hold a local referendum on decisions to increase council tax beyond 3% – is “outdated and ripe for removal” the report said.

“Local government deserves better and local government deserves more,” Carr-West concluded.”

https://www.publicfinance.co.uk/news/2019/07/new-pm-given-stark-warning-over-future-local-councils

“Audit review raises prospect of new transparency rules for s151s” [Finance Officers]

“A review of local government audit announced by the government this week will consider new measures to give the public better access to financial information produced by section 151 officers.

Local government secretary James Brokenshire this week revealed the review, which will report next Spring, will be headed up by former Chartered Institute of Public Finance and Accountancy (CIPFA) president Sir Tony Redmond.

Brokenshire told the House of Commons this week that the review will examine the purpose, scope and quality of statutory audits of councils in England and the supporting regulatory framework.

The review follows concerns about the quality of local authority audits following the abolition of the Audit Commission in 2014.

Speaking to CIPFA’s annual conference in Birmingham this week, Brokenshire said: “Concerns have been recently raised about audit quality and whether the audit framework is too fragmented.”

But he said that restoring confidence in the audit regime needs to be accompanied by improvements in the way financial information is presented by local authorities.

He said: “As a result, I have also asked Tony to include transparency of financial reporting within the scope of his review.

“To be absolutely clear, I am approaching this with an open mind but our aim must be to ensure that the financial reporting and audit framework helps members, section 151s and chief executives to make informed and responsible decisions about improvements and is more open and accountable to our citizens.” …”

Audit review raises prospect of new transparency rules for s151s

“Secretary of State launches review of local government audit regime”

“The Secretary of State for Housing, Communities and Local Government has announced an independent review of the effectiveness of the local authority financial reporting and audit regime in England.

The review will be led by Sir Tony Redmond, the former Local Government Ombudsman, former Local Government Boundary Commissioner for England and former President of the Chartered Institute of Public Finance and Accountancy.

In a written ministerial statement James Brokenshire noted that Local Government in England was responsible for 22% of total UK public sector expenditure.

He said: “It is essential that local authority financial reporting is of the highest level of transparency to allow taxpayers to understand how their money is being spent.”

The responsibilities for the framework within which local authority audits are conducted are set out under the Local Audit and Accountability Act 2014.

The Act gave effect to commitments to abolish the Audit Commission and its centralised performance and inspection regimes and put in place a new localised audit regime, refocussing local accountability on improved transparency.

“Now the Act has been fully implemented, the Government is required to review its effectiveness,” Brokenshire said.

“The Government wants to use this opportunity to step back and review the effectiveness of the local authority financial reporting and audit regime. Developments in the sector have led to a perceived widening of the ‘expectation gap’; that is, the difference between what users expect from an audit and the reality of what an audit is and what auditors’ responsibilities entail.”

The Redmond review will examine the existing purpose, scope and quality of statutory audits of local authorities in England and the supporting regulatory framework to in order to determine:

Whether the audit and related regulatory framework for local authorities in England is operating in line with the policy intent set out in the Act and the related impact assessment;

Whether the reforms have improved the effectiveness of the control and governance framework along with the transparency of financial information presented by councils;

Whether the current statutory framework for local authority financial reporting supports the transparent disclosure of financial performance and enables users of the accounts to hold local authorities to account;

and

Appropriate recommendations on how far the process, products and framework may need to improve and evolve to meet the needs of local residents and local taxpayers, and the wider public interest.”

https://www.localgovernmentlawyer.co.uk/governance/396-governance-news/40973-secretary-of-state-launches-review-of-local-government-audit-regime

“Climate crisis: can councils deliver on bold promises to cut emissions?”

Yes, if they have the will as the councils mentioned in this article already have:

https://www.theguardian.com/society/2019/jul/10/climate-crisis-can-councils-deliver-bold-pledges?CMP=Share_iOSApp_Other

“UK watchdog says all top accountants [including EDDC’s] fail audit quality test”

“All of Britain’s leading accounting firms have failed to hit quality targets set by their regulator for auditing company books for the second year in a row, with Grant Thornton and PwC singled out to join KPMG under tougher supervision.

The damning review from the Financial Reporting Council (FRC) will pile pressure on the government to implement a proposed sector shake-up prompted by corporate failures at builder Carillion, retailer BHS and an accounting scandal at cafe chain Patisserie Valerie.

The FRC said EY, KPMG, Deloitte and PwC, known as the Big Four, and BDO, Grant Thornton and Mazars from the next tier down, all failed to hit a target that 90% of audits reviewed by the regulator were good or required only limited improvements.

Only 75% of the sample of audits from among Britain’s 350 top listed companies for the year ending December 2017 met the 90% target overall as accountants failed to challenge information clients gave to them, the FRC said.

There was no overall improvement on last year’s findings when all audits reviewed failed to meet the 90% target.

“At a time when the future of the audit sector is under the microscope, the latest audit quality results are not acceptable,” said Stephen Haddrill, the FRC’s chief executive.

Radical reform of the sector was proposed last December to rebuild public trust in audit, including replacing the FRC, described by lawmakers as toothless, with a more powerful watchdog.

Haddrill and his chair Win Bischoff are being replaced. …”

https://uk.reuters.com/article/us-britain-accounts-regulator/uk-watchdog-says-all-top-accountants-fail-audit-quality-test-idUKKCN1U42QR

“There Are 8 Million Potholes On UK Roads Because Of Austerity, Says New Report”

“… Routine road maintenance budgets have fallen from £1.1 billion in 2009/10 to around £701 million in 2017/18, the LGA said.

This budget is used to fund expenses such as minor road repairs, cleaning drains and fixing street lighting.

The LGA estimated that the reduction could have covered the cost of repairing 7.8 million potholes. …”

https://www.huffingtonpost.co.uk/entry/potholes-uk-roads_uk_5d2038b3e4b0f312568414d2?guccounter=1

Local authority finance officers “lose confidence in ability to deliver services”

The majority of local government finance officers have lost confidence in their future financial positions over the last year, a CIPFA survey has revealed.

Seventy per cent of respondents said they were either slightly less or much less confident in their financial position this year compared to 2018-19, according to the CIPFA’s confidence survey out today.

It also found that 68% said they were either slightly less or much less confident in their ability to deliver services in 2020-21. Sixty-two per cent expressed equal confidence in their financial position for 2019-20 as they had last year, the survey revealed.

CIPFA found that the area of greatest pressure for top tier authorities was children’s social care, with the number of authorities rating it as the biggest pressure rising by six percentage points.

For districts the greatest pressures were housing, cultural services and environmental services.

Rob Whiteman, CIPFA chief executive, said: “Local government is facing greater demand pressures than ever before, with particularly pressures in adults’ and children’s social care and housing. Local authorities also lack certainty about their future financial positions, so it’s unsurprising to see confidence on the decline.

“We have repeatedly pointed out that local government is in need of a sustainable funding solution, but meeting this demand requires more than pennies and pounds. The sector as a whole must come together to address the challenges of effective service delivery.”

CIPFA’s survey received a total of 119 responses from authorities in the UK – 56 top tier authorities, 47 English districts, 12 Scottish authorities, and 4 Welsh authorities.

The LGA yesterday released a survey, two-thirds of councils believed they would not be able to fund statutory services by 2024-25.

https://www.publicfinance.co.uk/news/2019/07/cfos-lose-confidence-ability-deliver-services