Councils are being unrealistic about how quickly they can make savings and could face severe financial difficulties in coming years as a result, a survey of finance directors suggests.
Nearly three quarters (70%) of respondents to a Chartered Institute of Public Finance and Accountancy (CIPFA) survey said they were concerned some of the savings their councils are planning for will take longer than estimated to come through.
More than 50% of respondents said they were concerned “that some initiatives will cost more to implement and save less than currently planned”.
A CIPFA statement said: “Chief finance officers are worried about whether all of the planned change measures can be delivered successfully on time. Failure to do so is likely to result in budgets being overspent, creating further financial problems for authorities in the medium term.”
Councils are currently finalising their budgets for the new financial year commencing on 1 April 2011.
Councils are hoping to balance budgets through a range of new efficiency projects, share service ventures, increasing or introducing new fees and charges for services, and reducing or withdrawing front-line services, CIPFA said.
CIPFA chief executive, Steve Freer, said, “Many councils are planning major organisational, systems and service changes in every department.
“Chief finance officers are committed to help implement these initiatives but they are also drawing attention to the very real risks which must be managed along the way.”
“Balancing tight budgets is a tough, stressful activity. CFOs are reminding councils that the business of delivering budgets is likely to be even more challenging.”