Treasurers see Brexit undermining financial sustainability
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Almost two thirds of senior council finance officers believe that Brexit will have a negative impact on councils’ financial sustainability, according to a Room151 survey.
The 2018 Local Government Finance & Treasury Current Affairs Survey of 86 section 151 officers and treasurers found that only 35% believed that there would be little impact on council finances from the UK’s decision to leave the European Union.
Not a single respondent said Brexit would have a positive effect on the financial affairs of the increasingly beleaguered sector.
The figures closely match a recent survey carried out separately by think tank the New Local Government Network (NLGN).
This found that 61% of leaders and chief executives believed leaving the EU would have a negative or very negative impact on their local economy.
However, NLGN also found that 12% of the same group believed the impact of going it alone would have a positive or very positive impact.
Adam Lent, director of the NLGN, said: “Whatever you think of Brexit, it has to be a concern that the most senior local government figures charged with keeping their local economies buoyant feel so pessimistic.
“The government needs to move very rapidly to address this striking loss of confidence by engaging much more closely with council Leaders and chief executives as they prepare for the UK’s withdrawal from the EU.”
Room151’s survey found that senior treasury and finance officers in Labour-led authorities were more pessimistic about Brexit, with 79% predicting a worse financial outcome for councils.
This compared to 65% in Conservative local authorities.
NLGN’s regional breakdown found the greatest worry about the issue in the North East, with the least concern coming from the South East of the country.
In December, Rob Whiteman, chief executive of the Chartered Institute of Public Accountancy and Finance, told a committee of MPs that it is currently difficult for local government to get its voice on Brexit heard in Whitehall.
He said: “I think it is at an early stage, but my experience of government is that it is incredibly stretched. In fairness, I am not sure they have much bandwidth to think.”
Whiteman added that the government has time to shape the future structure for distributing regional funding following the UK’s departure from the European Union.
“I don’t think we should look upon transition to new arrangements as a two-year issue before we leave the EU,” he said.
According to a paper produced for the Greater Manchester Combined Authority, the government is set to begin a formal consultation on a replacement for the current European Structural Investment Fund from 2020.
The paper said that the Ministry of Housing, Communities and Local Government has held a series of informal meetings with officers from local enterprise partnerships, core cities and combined authorities.
According to three senior academics on the website UK in a Changing Europe, the re-domestication of regional policy following Brexit “will almost certainly mean the re-politicisation of it, making long-term commitments all the more difficult.”
“Successive governments will have an incentive to abolish what went before,” it said.
“Indeed, in a highly centralised, top-down and politically polarised governance system such as the UK, the temptation to do this will be very strong.
“This will make long-term decisions and the establishment of long-term policy commitments — which are essential for regional rebalancing — much more difficult.”
