Q&A with Andrew Burns, president of the Society of County Treasurers

Andy Burns, director of finance and resources at Staffordshire County Council, has taken up the post of president of the Society of County Treasurers. He spoke this week to Room151 about treasury and other financial issues facing county council finance officers.

Room151: What is in your in-tray for the coming year?

Andrew Burns: The first issue is that we have a general election looming and whatever the outcome it will have an impact on public finances. Part of my responsibilities involve acting as the lead financial adviser for the County Council Network and in this capacity, we are feeding into the CIPFA/LGA independent  review of local government finance. We are also looking at how we deal with the implications of the government’s Autumn Statement and the Better Care Fund, which is combining health and social care funds.

Whatever the outcome of the election, we can’t as counties deal with these issues alone. The challenge is now how we involve our partners – the police, health services, local enterprise partnerships – and the public. The traditional landscape where we were just talking to our districts is gone.

R151: What opportunities and challenges do local enterprise partnerships offer to county councils?

AB: In our LEP area we have joined up with Stoke on Trent City Council, a unitary, plus eight districts – four of these are also in the Greater Birmingham and Solihull LEP. What LEPs bring is the ability to get businesses really engaged about growth and prosperity while providing a democratic mandate that the regional development agencies lacked.

There is a real issue for county treasurers to provide some financial leadership. The county council has an annual revenue budget of about £1.2bn – but in total there is £7.2bn total public spending within the LEP area. My job has moved from how do I manage our budget to how do we shape the spending of the £7.2bn for the benefit of the wider area.

R151: How are you approaching that?

AB: As soon as you try to pool budgets then people can get defensive over losing resources. So our approach is to agree outcomes and strategies collectively and then for individual councils to shape their own plans and resources to meet the aims.

R151: A recent report by Grant Thornton said that county authorities are facing a proportionally greater challenge than districts, partly due to the former’s responsibility for services such as social care. Do you agree?

AB: Certainly, because we have social care responsibilities, we are facing challenges not just from reduced central grants but because of a growing and ageing population. We are now having to look at how you turn off demand for services, whereas before the challenge was how do we find more money to meet increasing demand.

Top tier authorities now have health and wellbeing boards, which bring together clinicians and politicians. In Staffordshire and Stoke on Trent, we have a £2bn health and care spend so we have agreed a five year strategy to shift £200m from spending on treating illness to care in the community. It is about how to keep people out of hospital. People don’t want to be there and it is cheaper and better to care for them in the community. The key is to put in place the replacement services before removing the existing ones. This can involve a degree of double spending for a short period but it is more efficient in the long run.

The question is does this release cash or just relieve pressures? We are having to run just to stand still.

R151: It is not long since 2015 was being touted as the year that councils would begin to fall over – is that really going to happen?

Counties are generally bigger organisations with the benefits of four year election cycles and longer term financial planning. This potentially puts them in a better place than some – particularly small districts. However, most councils will be able to cope in 2015-16. From 2016-17 things look a bit less certain.

R151: Councils are currently shaping next year’s treasury management strategies. Are you noticing any shifts in emphasis emerging?

AB: If interest rates start to tick up then are people going to take more risk? I am not sure that is going to happen this year. At the moment, the legacy of Iceland is still around and people are more cautious than they were before that happened. To be honest, the returns available for taking extra levels of risk are pretty miniscule – the options for significantly bigger returns in safe places just aren’t there.

R151: Are counties set to benefit from setting up their own standalone companies?

AB: Many counties have already done this. For example, Essex Cares, a trading company providing social care services was set up by the county council some time ago. In Staffordshire we have a couple of trading entities, as well as a joint venture with Capita to provide education support services. They are an important part of generating a bit more income, but not sufficient on their own. Politicians in Staffordshire don’t want us to compete with the private sector, whereas in some areas that is not so much of an issue.

R151: Do you think councils will ever be able to survive without government grant?

AB: It could be possible in places where you can grow housing and businesses. But where they are full or where demand is very high then it will be difficult. The current independent commission into local government finance is looking at whether regional or sub-regional pooling will work. I think counties would be open to that – in Staffordshire our politicians would look at it if we could guarantee we can cope with rising demand. However, it would work better if we could have a share of VAT or PAYE – but whether the Treasury will ever allow that is a different question.