Agenda item

The Select Committee gave consideration to a report of the Director of Finance which

•        Provided an update on the ability of Local Authorities to withstand future budget pressures by summarising recent Local Authority financial failures and challenges as reported in the media;

•        Presented the findings of a recent Public Accounts Committee report concerning the financial sustainability of Local Authorities; and

•        Highlighted the Chartered Institute of Public Finance and Accountancy’s (CIPFA’s) efforts to ensure attention on this issue remains in the spotlight through the development of a Financial Management Code which will support CIPFA’s financial resilience index.

The Select Committee were informed that the report provided an update, following on from the report presented to them in December 2018, on the issues that were facing Local Government in light of further recent media attention with regards to the financial sustainability of Local Authorities after the financial failure of Northamptonshire County Council in February 2018. There had also been a number of papers issued by a variety of organisations on the issue of Local Government Financial Sustainability and a summary of these were provided for Members.

Members noted that Northamptonshire County Council had finished the financial year 2018/19 with a revenue underspend following the programme of management action that had been implemented.  However, the most recent reports in relation to 2019/20 had highlighted that the financial challenges still remained and work was still ongoing to address legacy financial issues using a variety of different means. From 2021 (previously April 2020) the County Council was to be abolished and replaced by two new unitary authorities.

There are a number of other Local Authorities which had also attracted media attention in relation to financial resilience and financial sustainability and Members were updated on these.

The Select Committee noted the summaries of the papers issued including CIPFA’s development of a Proposed Financial Management Code, designed to support good practice in financial management and to assist Local Authorities in demonstrating their financial sustainability.

Members were informed that, despite significant financial challenges, Oldham Council’s financial position remains strong, as demonstrated with an increase in both balances and earmarked reserves at the end of 2018/19. The Council has robust budget and budget monitoring processes in place and the Finance Service ensures that it complaint with good practice.  It is therefore well placed to safeguard the financial position of the authority.

Members asked for and received clarification of the following:-

·       Control of social care budgets – it was accepted that there had been a significant increase in spending and service pressure over the last three years and the Childrens Social Care service was undertaking a fundamental review to ensure that it uses the resources available in the most efficient and cost-effective way. As had been discussed at a recent meeting of this Select Committee, these actions were delivering savings.  It was however, noted that it was difficult to accurately predict the number of children that presented.  Members were also advised that the number of adults with complex needs had increased and the Adult Social Care Service was putting operational arrangements in place to manage this efficiently.

·       The situation of Northamptonshire – it was explained that the Council had struggled to produce a balanced budget in previous financial years and had relied on using reserves rather than making savings or increasing Council Tax.   Auditors reports had had limited circulation and therefore Members had not been fully sighted on the financial challenges. The Council had not been given any additional Government funding and had been allowed to increase Council Tax by a higher percentage than other Councils and use capital receipts to support the revenue budget. The County Council was due to be abolished and replaced by two unitary Councils, and work was ongoing to achieve a balanced budget before then.

Brexit – the impact of this for Oldham cannot be predicted. The Council had received a small amount of additional Government funding to support the Brexit implications and had set aside some reserves. It was explained that Brexit had disrupted the normal local authority spending review process and the expected three year spending review will be replaced by a single year funding round.  This would hamper the Council in setting its Medium Term Financial Strategy.

RESOLVED that the content of the report be noted.

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