• Home
  • About
  • Subscribe
  • LATIF
  • Conferences
  • Dashboard
  • Edit My Profile
  • Log In
  • Logout
  • Register
  • Edit this post

Room 151

  • 151 BRIEF

    What's New?

  • Slough welcomes commitment that Office for Local Government ‘will not be a burden’

    June 30, 2022

  • Homes England agrees strategic partnership with two authorities

    June 29, 2022

  • Soaring inflation and pay pressures to add £3.6bn to council budgets

    June 28, 2022

  • Underfunded social care reforms could ‘exacerbate workforce pressures’

    June 27, 2022

  • Nottingham City Council leader labels proposed intervention as ‘disappointing’

    June 27, 2022

  • Government preparing to intervene in Nottingham City Council

    June 23, 2022

  • Treasury
  • Technical
  • Funding
  • Resources
  • LGPS
  • Development
  • 151 News
  • Blogs
    • David Green
    • Agent 151
    • Dan Bates
    • Richard Harbord
    • Stephen Sheen
    • James Bevan
    • Steve Bishop
    • Cllr John Clancy
    • David Crum
    • Graham Liddell
    • Ian O’Donnell
    • Jackie Shute
  • Interviews
  • Briefs

Agent151: Spending control needs a credible vision and everyone on board

0
  • by Agent 151
  • in Agent 151 · Blogs
  • — 9 Oct, 2017

Photo: Pixabay, CC0

Local authorities are now in the grip of a budget process dominated by the need to make big savings. Agent151 argues that finance chiefs need to accept that it’s not their problem alone.

If you’ve been working on balancing your budget for next year, as I have, then the summer has been a frustrating period. No-one has been around to work on those budget proposals because they’ve all been away camping in France or enduring the rain in Devon. Haven’t they read the budget timetable, for heaven’s sake? Don’t they care?

This time the challenge is bigger than ever before for many councils, and it’s all about social care. With funding still following the austerity curve, spending on care packages rising out of control, the usual bail-outs from the health service not likely to be forthcoming, and an ingrained culture among some social care colleagues of spending first and asking questions afterwards, many finance directors are complaining about overspends that cannot now be brought back under control. To make matters worse, they are finding that, going into the autumn, social care colleagues are struggling to come up with any suggestions about how their budgets might be trimmed to contribute to the corporate budget gap.

What, then, can a weary finance director—one who has been too busy to take a holiday this summer and is now into perhaps the most difficult budget setting process of their career—do to stem the tide of overspending and pull a credible set of budget proposals together?

Ownership

The single most important thing is to establish within your organisation that it is not your problem alone, although it may feel that way. Corporate ownership is a must. Your politicians must understand and accept the necessity to address the issues. Your colleagues around the boardroom table must do likewise. A budget problem on this sort of scale can only be solved if everyone plays their part.

Let’s start with the overspending. The first thing is to understand the problem. Exactly where and how is the overspending occurring? Is the service measuring and forecasting it accurately, and if not, the first action is to remedy this. You need to know the true scale of the problem. The service will suffer from optimism bias in its forecasting; your job is to make sure that the numbers that go into the finance monitor present a prudent position—in other words, they won’t get worse as the year wears on. Be careful here: the service will probably present you with a few unwelcome surprises in a month or two anyway, so make sure this possibility is reflected in your commentary.

Tackling the in-year position will require the entire organisation to tighten its belt a few notches, unless your reserves are big enough to take the hit. Don’t expect the areas that are overspending to be able to solve the problem on their own: everyone will have to play their part. This may cause some resentment in areas that have been spending to budget, and some blaming of social care colleagues; you may need to remind everyone that you all work in one organisation and that it is one community that you are serving. Also, be clear with everyone that the measures you are putting in place are only temporary, until spending is under control. This is an important point: a spending freeze can only work if it has a finite life.

Credible vision

Look at spending on staff. Recruitment can be controlled. Overtime and honoraria, expenses, and the use of expensive agency staff and consultants are all opportunities for spending reduction. Next look at contract spending, and where possible move the authorisation level on purchase orders and invoices upwards until only senior staff can approve spending. This introduces senior scrutiny, but also creates a bottleneck, slowing spending down. Monitor and hold budget holders to account on a monthly basis throughout this period.

Once you have spending controls in place, you will be able to focus on the budget picture for the next few years.  Your work with the areas that are experiencing the biggest pressures will have provided insight into the issues. However, you will find that there are no immediate solutions. Fixing things, in as much as they can be fixed, will take time.

It is important to engage the whole organisation in planning the future, but how you do it will depend upon the way your organisation is configured: the politics, the layers of accountability, the appetite for change. Do what works for you. The underpinning requirement is to line everyone up behind a credible vision of your organisation managing within its means and delivering the outcomes your community needs, and a delivery plan that gets you there. With spending under control you will have a much better chance of achieving this, and perhaps squeezing in that overdue holiday too.

Agent151 is a senior local authority finance director and s151 officer writing exclusively for Room151.

Share

You may also like...

  • ESG is an ‘essential’ consideration for money market instruments 23rd Nov, 2021
  • Don’t let council-owned companies spin out of control 30th Jun, 2021
  • What would negative sterling interest rates mean for UK money market funds? 25th Feb, 2021
  • Valuations 2022: what might it means for investment strategy? 15th Dec, 2021

Leave a Reply Cancel reply

You must be logged in to post a comment.

  • 151 BRIEFS – WHAT’s NEW?

    • Homes England agrees strategic partnership with two authorities
    • Soaring inflation and pay pressures to add £3.6bn to council budgets
    • Underfunded social care reforms could ‘exacerbate workforce pressures’
    • Nottingham City Council leader labels proposed intervention as ‘disappointing’
    • Government preparing to intervene in Nottingham City Council
  • Room151’s LGPS Roundtables

    Biodiversity
    Valuations & Risk
    LGPS Women

  • Room151’s LGPS Roundtables

    Biodiversity
    LGPS Women
    Valuations & Risk
  • Latest tweets

    Room151 9 hours ago

    Hillier confirmed as keynote speaker for LATIF/FDs’ Summit: Dame Meg Hillier, chair of the Public Accounts Committee, has been confirmed as a keynote speaker for Room151’s combined Local Authority Treasurers Investment Forum (LATIF) and FDs Summit. The… dlvr.it/ST70F7 pic.twitter.com/hxV676Iley

    Room151 9 hours ago

    Councils’ funding at risk due to ‘undercounting’ in census data: Population estimates in London and Manchester may have been significantly underestimated in the 2021 census potentially threatening government funding for frontline services in these… dlvr.it/ST707J pic.twitter.com/VncIyaXa01

    Room151 2 days ago

    Gove at LGA: councils to receive two-year financial settlement: Michael Gove has announced that councils will receive a two-year financial settlement from next year to provide authorities with “financial certainty” and allow them to plan ahead. The… dlvr.it/ST0kSV pic.twitter.com/wxL3UM4sGO

    Room151 2 days ago

    LGPS valuations: the digital journey: Rob Bilton explains how technology is helping to deliver one of the most complex data exercises in the world of public sector pensions. The 2022 valuations for LGPS funds in[...] dlvr.it/ST0kMq pic.twitter.com/VxjSPC2Uvo

    Room151 6 days ago

    Conrad Hall: ‘more sophisticated’ regulation needed for local government: The chair of the CIPFA/LASAAC Code Board has questioned the sophistication of financial regulation in local government and the continuing focus of the Department for Levelling Up,… dlvr.it/SSnPBV pic.twitter.com/G5d7JCWF8c

    Room151 1 week ago

    Slough Council approves plans to restructure finance department: Slough Borough Council has approved plans to restructure its finance department to enhance capacity and capability and to address a “significant weakness” in the function. The local… dlvr.it/SSf8DG pic.twitter.com/l5lmyHmkBg

  • Register to become a Room151 user

  • Previous story Reversal of social rents policy puts housing development back on the agenda
  • Next story Sponsored Roundtable: CCLA’s Diversified Income Fund and the appetite for new asset classes

© Copyright 2022 Room 151. Typegrid Theme by WPBandit.

0 shares