Danny Mather: A Dickens of a year for Warrington’s treasury

2015 was the Chinese year of the goat and four characteristics of that zodiac sign have been applicable to the council during 2015, namely being creative, resilient, transparent and honest.

Warrington council began the year like most councils, planning its budget with significant savings having to be made. This equated to £16m for 2015/16 alone. The council incorporated outcome-based budgeting as part of its corporate budgeting strategy for the 2015/16 budget, which has greatly improved our corporate planning approach. How ironic then that at the close of the year the council is busy formulating plans of how it will save £22m in 2016/17.

The spring saw the annual closure of accounts process begin in earnest, with planning for the earlier closure of accounts in 2017/18, when the accounts must be closed a month earlier, and future changes to fixed asset and infrastructure accounting.

These technical details are often lost on the almost daily government announcements on changes to the sector but still constitute a major challenge to the profession that must be met.

Cloudy weather

During the summer, the clouds gathered over the Council’s green energy programme, with the government’s consultation on massively reducing the feed in tariff being published.

Many of the social green energy schemes the council had undertaken in the year to reduce fuel poverty in the borough will be made unviable for future rollout. This was confirmed with the pre-Christmas government announcement confirming solar tariffs will be cut by 65%, a contradiction in government policy given the outcome of the recent Paris summit on climate change.

The summer also saw the council’s well documented £150m city bond issue. This is a great example of the public and private sectors coming together and delivering an innovative solution to bear down on borrowing costs. We hope this is a model local government can develop.

Like all authorities, the government’s autumn announcement that business rates were going to be 100% retained by local authorities is of great significance. Being a net contributor to the pool, it is something we have always campaigned for.

However, we are still none the wiser on the strategic impact on this for Warrington. The devil will be in the detail, but after the application 0f equalisation, no doubt by complex formula, appeals and reliefs this policy initiative may not be the knight in shining armour local government is awaiting.

Time bombs

Social Care is a well-known ‘ticking time bomb’ for the sector. No doubt during the festive break when we are tucking into our turkey and mince pies, the news will be full of the failings of the NHS over the festive season together with the announcement of large Trust deficits.

Whilst the announcement of the 2% social care precept is welcomed it goes nowhere near to mitigate the budget pressures Local Government are facing in this area.

The Spending Review announcement of potential increased freedoms in the use of capital receipts to fund revenue expenditure were welcomed.

Provided those receipts are used prudently in line with good business plans, they can offer VFM opportunities to Councils.

However, we must be aware of the misconception by some that capital receipts are going to compensate for revenue spending in the long term.

Devolution deals

During the year, Warrington was one of the 38 local areas across England that submitted proposals for devolution deals.

The devolution agenda is driving new and rapidly-evolving models of collaboration and a revitalised focus on place-based outcomes.

The new world will certainly need more commercial skills and a larger appetite for risk. There also must be recognition of the need for strong financial frameworks, as well as comprehensive governance and accountability structures, to what is a very real challenge to the profession.

The future of local government lies in collaboration, integration and partnership and in the drive to deliver effective public services, roles, structures and responsibilities will need to be revised.

Devolution does not happen overnight and, although there is a momentum and a sense of urgency surrounding this agenda, it will take time to get right. Resourcing the change in an environment of austerity will also supply its own challenges.

The end of the year is always a period of tradition and nostalgia and perhaps the words of Charles Dicken’s Great Expectations best reflect the current local government environment: “It was the best of times, it was the worst of times, it was the age of wisdom, it was the age of foolishness, it was the epoch of belief, it was the epoch of incredulity, it was the season of Light, it was the season of Darkness, it was the spring of hope, it was the winter of despair, we had everything before us, we had nothing before us…”

Danny Mather is corporate finance manager at Warrington Borough Council.