• 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

Richard Harbord: The budget pressure in on 151 officers

0
  • by Richard Harbord
  • in Richard Harbord
  • — 11 Mar, 2015

richard_harbord 520Once upon a time, even in difficult years, the budget process in a local authority was an exciting but calm event with a well rehearsed routine. The section 151 officer surrounded the process with a mystique which ensured that they were the only person who could bring it all together.

Indeed, I have a framed copy of the budget calculations of the borough treasurer of Richmond when I was deputy. The entire budget was set out in his unmistakeable hand on one side of A4. This particular budget was a very important one as it was his last year before retirement and he was determined to go out in a blaze of glory with a nil increase in the rate.

He was very close to the council leader, who he played golf with every Thursday afternoon, and I expect he shared with him the likely final position. The rest of us had no idea what the outcome would be. Remember this was a London borough of some size and the way the pre-determined target was hit is all laid out on that dog eared piece of paper.

He achieved his end and left suitably admired. I was fortunate enough to become his successor and early in the year it dawned on me that in fact we had no reserves whatsoever. My first year ended in a rate increase of 28%, which did not make a very auspicious start to my reign.

The situation as shared with members in advance of the budget was a difficult one and the budget ultimately rescued by the borough treasurer producing a rabbit from his hat. As time went on members grew more relaxed about the dire warnings of savings needed etc, and came to expect, and rely upon, the rabbit to resolve budget difficulties. This strategy was in some places eventually overplayed and there came a time when all the rabbits had been used up and disappointment set in.

Of course, in days gone by we did not attempt to formalise medium term planning in any way otherwise a whole row of rabbits would have been needed. The budget was a work of mystery shared only by the 151 officer, leader and chairman of the policy committee.

The budget making of today is far removed from that. Resources are scarce, the removal, or curtailing, of services a regrettable necessity and the pressure is on the 151 officer in an entirely different way. In one sense the days of Revenue Support Grant that we all complained about seem to have been far easier than the current system.

There are a number of pressures that must be faced. The level of reserves is an obvious one. There can be no justification for maintaining unnecessarily large reserves while cutting services and making redundancies. But judging the correct level of reserves is not easy. There are attempts to smooth out future savings in the medium term financial strategy to ensure sustainable authorities for four to five years . This may well necessitate the defence of rather larger reserves in the early years.

The other major difficulty is the business rate income forecast. This is a wholly uncertain process. The base business rate may be known but getting sufficient information on the likely appeals and making some sort of judgement about the success or otherwise of those appeals is a very uncertain business. The difficulty is that large sums of money are involved and refunds from lost appeals, over which the authority has no control, may necessitate several years of refunds back to the last revaluation or another key date. At the same time local authorities are finding business premises that have never been on the list and getting these into rating takes time and creates further difficulties for forecasting.

Auditors have expressed some concern over the accuracy of forecasts which underpin the budget. An optimistic forecast preserves services and a pessimistic forecast may mean unnecessary cuts. It is likely that such forecasts will be subject to an individual sign off by the 151 officer and that auditors should verify the forecast as a routine measure.

Whichever way you look at it the pressure on 151 officers to get these matters right is becoming ever more intense. Failure to do so could place the authority in financial difficulty or/and lead to reputational damage.

In difficult times, after a revaluation, 90% of the values on the list may be challenged. Of those, 90% will be dismissed. Spotting the other 10% is the key .

Richard Harbord is a consultant and a former chief executive of Boston Borough Council

 

Share

You may also like...

  • Richard Harbord: ‘Effective governance’ the key to commercial activity 17th Aug, 2021
  • Richard Harbord: Further signs that local government finance is failing 7th Apr, 2021
  • Richard Harbord: What will happen with business rates? 30th Nov, 2021
  • Richard Harbord Richard Harbord: Delayed “capital determinations” make section 25 opinions a new crunch point 11th Jan, 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 21 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 21 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 3 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 3 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 7 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 Research & Publications: Insight for local government finance
  • Next story James Bevan: Why not just cancel sovereign debt?

© Copyright 2022 Room 151. Typegrid Theme by WPBandit.

0 shares