9 minute read
Finance
Financial resilience in local authorities
Rob Whiteman, CIPFA CEO, discusses the CIPFA Financial Resilience Index and why it is important for local authorities to employ good management of their limited resources
Councils are facing a staggering array of competing challenges and priorities that are placing pressure on their finances. Short-term cash injections, the recent Budget, and the Chancellor’s determination to end austerity may go some way towards alleviating some immediate pressures. But, just as a plaster will not heal a substantial wound, short-term measures are not enough to offset the ramifications of a decade of austerity.
With money scarce and demand rising, it is important for local authorities to employ good management of their limited resources, ensure that financial stressors are understood and contained and that vital services are delivered to residents up and down the country.
While local authorities are generally pretty good at this, in the current climate, good public financial management is no easy task. It requires robust data and the appropriate expertise to interpret and understand the evidence.
The Financial Resilience Index
This is why CIPFA created the Financial Resilience Index. Understanding an organisation’s ability to remain stable, or not, in the event of financial shock is key to good decision making. The Index
is designed with Chief Financial Officers and large, maintain a solid financial in mind, allowing them to develop a position despite the challenges that clearer understanding of possible areas they’ve faced over the last ten years. of financial risk that could impact upon However there are some authorities their authority’s financial resilience. where, for one reason or another, there
The Index brings together a series of nine are signs of potential financial risk. indicators (eight for those without social care responsibility) drawn from publicly Providing local narrative available, but separate, data sources. The word ‘potential’ is important here.
Indicators range from the explicitly It is vital to note that the Resilience financial, such as levels of reserves Index is not a predictive model. Think of and amount of external debt, to more it like WebMD. While WebMD may be a qualitative measures. For example, the useful resource detailing symptoms and Index includes the authority’s children’s their possible severity, it contains a vital social care judgement from Ofsted. disclaimer that it is not a substitute for The potential financial risk being that professional diagnosis or treatment. Just authorities requiring improvement as one should not self-diagnose illness will likely have higher imminent without the intervention of a healthcare costs in this area than those that are professional, the experts in diagnosing delivering a service rated as good. the risks highlighted by the Index are
Together, these measures are intended to those working within local authorities. provide a rounded picture of an authority’s Data requires interpretation, and only resilience and to ensure the sector is individual councils are able to held to collective and robust provide the local narrative and standards of governance and context to understand what financial management. For the most part, the picture is positive. The evidence supports our belief that local authorities, by Trust in the public sector is at an all-time low, and is not helped by the notion that our public institutions are hiding from legitimate scrutiny the raw figures mean for their area. In short, while CIPFA can list the symptoms of potential financial risk, E
Government is committed to using public money responsibly but financial shrewdness aside, is there more it could be doing to help develop the economy?
When buying goods and services, the UK Government has a duty to deliver value for money; i.e. meet its strategic objectives while keeping expenditure as low as practicable.
This is clearly good for the public purse, but should public spending strategy look beyond purely fiscal measures when deciding who and where to award contracts? Are there other economic and social factors that need to be taken into consideration?
What is Blackthorn GRC?
Blackthorn GRC is an established software and software services provider and strongly believes the answer to this question is a resounding ‘yes’.
This was the motivation behind Blackthorn GRC’s recent tie up with Sussex Innovation (SInC). SInC is a business incubator helping budding entrepreneurs get established, and established companies up-scale their operations and compete for bigger business.
What is SinC?
SInC is a wholly owned subsidiary of the University of Sussex and through its ‘catalyst network’ provides access to a pool of highly skilled and motivated students and graduates looking for experience and that elusive ‘first step on the ladder’. It also has strong links with the university and a diverse and highly acclaimed academic community.
SInC also employs staff with considerable business expertise and therefore able to help infant businesses with legal and tax issues, accounting and payroll functions, research and studies, sales and lead generation, as well as publicity and communication activities. Blackthorn regards its tie up with SInC as ‘win-win’.
Ian hardman, CEO of Blackthorn, elaborates: “It remains very early days but identifying new markets through focused research and analysis is critical for a small technology business like Blackthorn with products that lend themselves to very many different applications. Nowadays, customers are looking for highly integrated solutions capable of saving them time and money; system that are intuitive to use and, in the case of Central Government, systems that make the business of government more transparent. Very often our customers require systems that present a different face and complexion, based on the user community.
“SInC allows us to dynamically flex our workforce, enabling us to undertake such studies needed to explore and understand new markets. SInC also has the community contacts needed to open otherwise closed doors. SInC will be a tremendous benefit in this area.”
Andrea Wall of the Careers & Employability Centre elaborates on how SInC has helped release the potential of our young workforce in their organisation: “The Catalyst team have made a real and significant contribution to the work of the Careers & Employability Centre. …[They] provided us with invaluable insights that have benefited our overall work. They have also actively demonstrated the fantastic contribution our students can make to the regional business community.”
Blackthorn is in an enviable position as the business has been operating for a number of years and has an established customer base of public and private sector clients from the UK and overseas. Even so, the prospect of helping young people through apprenticeship schemes remains out of reach, partly because of all the red tape but also the commitment required to support an apprentice for two, three possibly four years.
Employing graduates through SInC alleviates some of this pain, making it possible to hire young people on a much shorter timeframe to undertake very specific projects and assignments. These projects will benefit Blackthorn and students alike, bringing ideas and concepts out of university straight into the workplace, and helping Blackthorn stay both ‘current’ and at the cutting edge of technology and business process engineering.
For SInC, the upside of the relationship is the opportunity for Sussex graduates to gain experience in a varied range of roles with innovative, ambitious companies, and for its member businesses to access an affordable and flexible temporary staff resource. SInC was founded to support the regional economy by drawing upon its strong educational and research base, and to provide skilled knowledge workers with more opportunities to stay in the area and find meaningful employment. That mission was taken a step further with the launch of the Catalyst scheme, which began in Brighton and the surrounding district, and then extended to Croydon through sponsorship by the GLA in 2015. This brought SInC’s services within reach of organisations based in greater London willing to relocate to the south of the capital and assist with the revitalisation of Croydon.
So, arguably, there are aspect to procurement policy that need to be taken into consideration when placing contracts. Yes, and foremost, is the contract going to deliver value for money, but also could it help support the regeneration of a region and the sustainability of the local economy? How could it help deliver and upskill a younger workforce and balance their careers with the future of their community?
Blackthorn’s generic GRC software has many pro-active and re-active business applications. It is commonly used for criminal and fraud investigation, cyber incident response, employment vetting and health and safety inspection. These examples have in common the need for a prescriptive response and tools for handling and storing sensitive data.
Blackthorn’s services are available through the G-Cloud 12 Framework administer by Crown Commercial Services. L
FURTHER INFORMATION
Tel: 0208 123 7989 sales@blackthorn.com
Together, these measures are intended to provide a rounded picture of an authority’s resilience and to ensure the sector is held to collective and robust standards of governance and financial management
Local Government Secretary Robert Jenrick has confirmed that the £500 million Hardship Fund will provide council tax relief to vulnerable households, to help those affected most by coronavirus. Announced by the Chancellor at income. That’s why we’re giving local Budget, the Hardship Fund will go to councils an additional £500 million, to local authorities in England to enable ensure help is available for the most them to reduce the 2020 to 2021 vulnerable people in our society who council tax bills of working age people are struggling to pay their council tax receiving Local Council Tax Support. bills. The government is on your side Jenrick also confirmed that councils and will do whatever takes to help.” will also be able to use the funding to The announcement comes after provide further discretionary support the government confirmed councils to vulnerable people through other will receive an additional £1.6 support arrangements such as Local billion in funding to enable them to Welfare Schemes. respond to other COVID-19 pressures
He said: “Providing the necessary across all the services they deliver, financial support to people and including stepping up support for families is critical at this difficult the adult social care workforce time when many people will be and for services helping the most concerned about changes to their vulnerable, including homeless people.
local authorities are the doctors who can determine the severity of the problem.
That isn’t to say that the tool provides no contextual information at all. The Financial Resilience Index is a comparative tool and allows local authorities to benchmark themselves against their peers – either against councils of the same type (e.g. county councils/unitary authorities), or against their nearest statistical neighbour.
An accessible way to benchmark against peers supports CFOs in discussions around their organisation’s financial position with both elected members and the rest of the authority, and can aid consultation processes around financial decision making with local residents. On the reverse side, the platform allows elected members to ask informed questions about the advice they’re receiving from officers, and allows the public to interrogate decisions being made on their behalf.
Public and political scrutiny is having a moment following the election. In February, Boris Johnson’s government was criticised for only allowing certain members of the press into a briefing on Brexit. Trust in the public sector is at an all-time low, and is not helped by the notion that our public institutions are hiding from legitimate scrutiny. We hope that the Resilience Index will not only support good financial management and decision making, but also increase access to vital information at a time when the public sector is in need of more scrutiny, not less. L
FURTHER INFORMATION
