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24.09.18

Somerset council criticises financial resiliency index and media speculation on its finances

Somerset County Council has expressed their concerns over the proposed financial resiliency index scheme, saying that “having a relative ranking of all authorities” will not improve anyone’s financial position and offer an “unwelcome distraction.”

The index will be comprised by CIPFA and is designed to measure a council’s financial resilience, giving struggling council’s an early warning in order to avoid another Northamptonshire-style situation.

But bosses from the County Councils Network (CNN) and the Association of County Chief Executives (ACCE) July warned back in July that the CIPFA’s “well-intended” proposals would actually create a “naming and shaming index” and create a traffic light ranking of local government.

Now Somerset County Council has criticised the index during discussing about the proposals in a council meeting on Thursday.

In a written report, the council said: “In terms of value to Somerset, we would have to comment that this simple RAG index would at best be of limited use.

“As with any competent local authority, senior leaders and finance officers at the county council are obviously acutely aware of the financial situation that we face and are taking the necessary steps to achieve financial sustainability.”

Somerset council have struggled with their own financial issues recently, just this month approving £13m of major cuts to services and up to 130 jobs.

The report said: “There is significant press interest as to which authority might ‘fail’ next, and this is not helpful speculation.”

The report said Somerset had suffered a great deal of interest in trade and general press as a result of the speculation, especially following the external auditor’s Value for Money report in July.

“Therefore, any published index will be taken by in that light, particularly one that has been compiled by CIPFA, and is going to be used to continue this unwelcome distraction.”

It added: “Whilst it may be of general interest to see where Somerset sits in relation to its peers, this will not improve our financial position or mitigate the challenges that we face.”

Somerset council also argued that ranking all authorities might also provide a false presentation of financial health at some authorities, and also added that all local councils are facing significant financial pressures.

CIPFA said they were blown away by the responses to the index, which they say shows the “importance of the subject.”

In the same audit meeting last week, Somerset council revealed that despite massive cuts to services the authority might still fail to set a “sustainable budget.”

The council’s own official risk register, measuring risk of the council not being able to set a sustainable budget, currently sits at ‘very high.’

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Image credit - Martyn Gorman

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