05.12.14
Single-tier authorities are in the most financial trouble – survey
Single-tier authorities are facing greater financial challenges than their county and district counterparts, because of their responsibility for demand-led statutory services such as social care, according to a new analysis.
Grant Thornton’s fourth annual report on the financial resilience of the local government sector in England revealed that all single-tier authorities show strategic financial planning as an area of concern, which reflects the scale of savings required over the next few years.
However, the study reveals that counties appear relatively strong compared to single-tier councils, despite similar responsibilities for adult social care and other demand-led services. Financial control seems to be the main area of concern, for these councils.
Based on a detailed assessment of information from Grant Thornton’s statutory Value for Money (VfM) audits at 133 local authorities, supplemented by interviews and a supporting survey, the study found that district councils, compared to their peers, fare better.
This, according to the research, could be due to not having the pressures of demand driven services such as social care or large-scale urban or rural deprivation that other councils face.
It was stated that, with some exceptions, district councils are under comparatively less pressure from current funding arrangements. However, in proportion to revenue, some districts have had to deliver significant savings and have done this largely successfully.
The study also highlighted that over the past four years, local government authorities have evolved their financial management arrangements and many are now in a position to confidently forecast financial resilience in their medium-term financial strategy.
For example, 79% of single-tier authorities and 88% of districts were considered to have adequate medium-term financial planning arrangements, providing assurance that financial resilience could be maintained in the future. This leaves a minority of authorities at greater risk of facing a financial tipping point by 2016.
All authorities, however, will continue to face challenges in light of further spending reductions and any authorities that don’t continue to evolve could face a financial tipping point by 2016, according to Grant Thornton.
In particular, concerns remain about the funding structure for local authorities, and whether it allocates funding fairly in relation to local geographic, demographic and economic conditions.
Guy Clifton, Grant Thornton's head of local government advisory, said: “While their evolution should be celebrated, local government authorities will need to continue to adapt to further pressures in the coming years.
“Based on their track record over the past four years, we are confident that they will evolve to meet these challenges head on.”
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