District councils ‘most resilient in local government’
4 Dec 2014
Source: Public Finance
By: Mark Smulian
District councils are proving more financial resilient amid government funding cuts than their larger counterparts, a report by Grant Thornton has found.
Today’s fourth annual report on the financial resilience of the local government said unitary and county councils faced a more difficult financial position because of their responsibility for costly social care services. Increasing demand in these areas continued to present a particularly acute financial risk, it stated.
The report found that 79% of single tier authorities and 88% of districts could provide assurance that financial resilience could be maintained.
The remainder could face a 'tipping point' by 2016, the firm warned, that was ‘likely to require some significant compromises in the provision of local services’.
There has long been concern about the financial health of some councils, but so far the Local Government Association has judged only West Somerset District Council to be unviable. The authority subsequently merged its services and management with neighbouring Taunton Deane Borough Council.
Paul Dossett, Grant Thornton’s head of local government, said: ‘It is encouraging to see so many local government authorities have risen to the challenges they have faced over the past four years.
‘This is a major achievement and reflects an evolution in financial management that would have been difficult to envisage given the original reaction of the sector to the spending review in 2010.’
He said unitary and county councils faced a proportionally greater challenge than districts, partly due to their responsibility for social care and other demand-led services.
Districts had delivered proportionally significant savings and were ‘leading the way in new models of delivery including shared services and joint management arrangements’.
One significant change found by Grant Thornton was in the culture of local authorities, with concern for financial responsibility now permeating entire managements.
The report’s methodology applied the Audit Commission's four thematic areas of financial resilience (financial performance, financial governance, strategic financial planning and financial controls) across a sample of 40% of English councils.