We can't just kick the can down the road

By Gary Fielding | 04 November 2020

It is understandable that there are further calls for councils to be able to balance the books over a longer period. Comparisons have been made with the NHS, which can run up deficits. While true in principle, health colleagues are often managed to within an inch of their lives on how they can hit a control total by 31 March and I have seen little by way of multi-year flexibility, planning or realism on deliverability in Whitehall. This is not something I think local government should look at too longingly.

The recently revised s114 advice promoted by the Chartered Institute of Public Finance and Accountancy (CIPFA) rightly helps finance directors to give their own organisations more opportunity than ever to try and avoid a s114. That is one reason why we have not seen more s114s.

However, I suspect a multi-year balanced budget with deficits rolled forward could be just too tempting for some and an incoming administration may face some early unwelcome challenges – remember there are no NHS elections. Whether it is a safe strategy to hold off savings plans would inevitably become more subjective and the role of the finance director would be harder still in the face of a determined political leadership.

Councils can already balance a year off by using reserves where there is confidence that there is a longer-term plan to reach sustainability. If a council finds itself without reserves, or other measures to buy time, then it is at the higher end of the risk spectrum so can least afford to defer decisions on the basis that salvation may be around the corner. What if it isn’t?

The future has never looked more uncertain and I would suggest a successful budget strategy for the next few years is one that ensures survival but not just by conveniently kicking the can down the road.

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

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