Remove the ring fences

By Tony Kirkham | 13 October 2020
  • Tony Kirkham

Like the chancellor and the Treasury, we are finding it difficult to predict what it will look like beyond the pandemic. How long and how deep will the financial scarring be? We had hoped for a V-shaped recovery, but this is now very unlikely.

What happens next is also difficult to predict. Once we find a way to balance our in-year budgets we will have to set a balanced budget for 2021/22. We would normally do it within the context of a medium-term financial plan but that will very be dependent on what lies beyond the pandemic. Hence the Government’s Spending Review will be vital in giving local government certainty and stability.

So, we focus on the ‘now’ with an eye to the future. For what we do now will determine what we do next and beyond, so we are in the best possible position. We are digging deep into our reserves in the knowledge that resources will have to be put back as we manage financial risks that stem from national issues that have local consequences. At the same time, we are trying to manage a wide range of local issues.

We need as much flexibility as possible to make best use of resources for our residents and businesses. Councils are prevented from focusing on key priorities due to ringfences or restrictions on things like the housing revenue account, car parking charges, fixed penalty notices, environmental fees, dedicated school grants, Right to Buy capital receipts and the apprenticeship levy. As a result, residents and businesses may go without vital support, which, if it was allowed, could avoid long-term problems.

If Government would ease these restrictions temporarily local authorities could be more agile in addressing local needs now and in future. To quote the Prime Minister, a stitch in time saves nine.

Tony Kirkham is director of resources at Newcastle City Council

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