Last month’s National Audit Office report on Local authority governance makes scary reading.

At a time when Councils in England have suffered a 29% real-terms reduction in spending, the NAO says that risk profiles have worsened in almost 40% of single tier and County Councils. 62% of such Councils overspent on their service budgets in 2017-2018, and it is hardly surprising that attention is now focused on those governance arrangements most closely associated with financial sustainability. The Report raises several serious questions.

The NAO notes that ‘many authorities have pursued strategies such as large-scale transformations or commercial investments that in themselves carry a risk of failure or under-performance.’  It also highlights the challenge of ‘elected members in some authorities having to take more locally contentious decisions to deliver savings.’

Greater local challenge:

Decisions on savings are being challenged by local groups and service users. This places a premium on ensuring that the decision-making and consultation processes are sufficiently robust to survive potential legal challenges. 

This is why accountability matters. In theory there is a complex set of governance machinery. There is internal audit. Separately there is external audit. Some Councils have Audit committees. They are all meant to have Overview & Scrutiny Committees. There is even a mystical figure known as a Section 151 officer – there to warn of an unbalanced budget! Finally, there is the requirement to consult local people.

This regime of checks and balances has to protect Councils and their residents from the unintended consequences of ill-considered decisions. They are there to offer safeguards against failures to deliver statutory services – or to meet the expectations of the public. In essence, to stop half-baked solutions or downright bad decisions.

That’s all very well, but the pressures are enormous, and the annual search for savings gets harder with every budget cycle. No wonder some Councils would prefer it if they didn’t have to consult on these tough decisions, but the law says they must, and public opinion would be outraged if they didn’t.

The best way to meet the NAO’s challenge is to prepare better. In its advice to Councils, the Institute advocates: –

• Starting earlier. Programme teams (covering a range of services …) should be assembling now to start considering service changes for the 2020-2021 financial year. By summertime, emerging themes and potential proposals must have been actively identified and examined.
• Involving stakeholders. To be truly effective – and to maximise the chances of emerging with sustainable and defensible solutions, it is now essential that the options development phase be done with the active participation of key stakeholders. Whereas local government is not normally required to observe the strict rules that apply to the NHS, the growing integration of health and wellbeing services make these standards obligatory for large parts of a top-tier Council’s service portfolio. In any case, it makes sense. Co-production may well be the right way to proceed.
• Focus on impacts. More legal challenges have succeeded because of weaknesses in Impact Assessment than any other form of failure in the consultation process. The law is often contradictory with some Judges ruling that (for equality impacts at least) there is no need for such documents to exist until the last minute when the S.149 ‘due regard’ criteria has to be met. Don’t be fooled. Best practice is clear. The earlier you assess impacts, the sooner you can test your assumptions and make informed decisions about what to offer the public in a consultation.

All this is topical right now because the implications of the 2018 Bristol special educational needs (SEND) case is still reverberating around Town Halls. It is significant because it suggests that in some cases, Councils may need to undertake a formal consultation at the point where the overall SHAPE of the budget is being hammered out, and not wait until the moment when its SUBSTANCE – through specific proposals – can be published in detail. This will amount to a difficult change of practice for many authorities.

It is too late to change anything about the Budget consultation process for 2019-2020. But the Institute will help those who are far-sighted enough to start thinking about future plans beyond the next financial year, and expects to run Budget Consultation Workshops for members and clients very soon.

It is little wonder that the National Audit Office has highlighted the danger of under-researched or ill-prepared savings proposals as being a risk to local authorities. All the various mechanisms for accountability have their part to play, but the involvement of public and stakeholders is one important ingredient in safeguarding the integrity of our local government structures as the financial squeeze continues.