Reduced council spending is not all good news

By Gary Fielding | 11 August 2020

As I write this it isn’t clear what the fourth monthly COVID returns will say about spending in councils. I suspect, however, that there may soon be a reduction in the spending for many councils.

This is a good thing, right? Well, it may be but we will need to dig carefully below the headlines before conclusions.

The Government published Procurement Policy Notices (PPNs) during COVID to guide councils on how to deal with its supply chain. It started as very bullish in encouraging councils to prevent companies it worked with from going bust but has become much more circumspect of late. Councils recognise many suppliers are also valuable local businesses whose very livelihood, and related jobs, depend upon reliable revenue. Councils have therefore tended to respond well.

Given the Government’s more recent lukewarm commitment to funding for councils and the issuing of more equivocal PPNs then it is perhaps inevitable that councils look to reduce spending and that has to include support to supply chains. Social care providers are likely to be at the forefront as COVID-premia are reduced yet many continue to face voids and a loss of fees.

The care sector has shown to be critical (yet undervalued) in the country’s response to the coronavirus crisis yet normal service looks like it is some time away and there may be longer term-societal changes that bring further challenge to providers of residential care.

Often councils are looked at as the first and last port of call by distressed suppliers and Government alike. There is, however, a growing sense that councils cannot save sectors of our economy single-handedly and support cannot be at the expense of a council’s own solvency. So beware of any headlines on reduced council COVID spending as undiluted good news – for some this may be decidedly unwelcome.

Gary Fielding is corporate director of strategic resources at North Yorkshire CC and president of the Society of County Treasurers

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