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Finance officers being axed for telling truth, warns Whiteman

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The widespread demotion of finance directors is resulting in councils avoiding acknowledging the truth about the scale of their financial challenge, Rob Whiteman has warned.

The chief executive of the Chartered Institute of Public Finance & Accountancy made a plea for good governance in an interview with LGC to mark his organisation’s launch of a consultation on a new index to measure councils’ financial resilience.

Mr Whiteman said the index, which will consider indicators including the depletion of resources, resource levels, demographics, service pressures and borrowing, would force councils into “some difficult conversations that shouldn’t be avoided”.

He urged the sector to use the index to “mature… so we can challenge each other a little bit when the warning signs are ignored”.

Within councils, Mr Whiteman criticised what he believed to be a growing “trend” in which “chief financial officers are relegated and demoted off the top table”.

“The relegation of finance officers is just one of the things that means it’s now easier to avoid being told the truth if a council’s finances are heading in the wrong way,” he said.

“I’ve seen a worrying number of finance colleagues who have given pretty tough advice to then seen their job abolished or demoted.”

Mr Whiteman urged councils to “put some capacity” into finance roles to help them make effective budget strategies and to consider increasing pay amid a brain drain of “young, bright accountants” away from the sector.

He also expressed dismay that a lower proportion of council chief executive roles were now taken by finance or legal directors than in the past. While the trend had initially been for service directors to take chief executive jobs, these days, “the most common route to becoming chief executive is a regeneration director as a deal maker”.

“That’s good if councils want to do deals,” Mr Whiteman said. “But actually, chief executives do also need to be town clerks in the old sense of the term that set strong governance and make sure that options are considered and that officers are not bullied into feeling that they cannot give the advice that members want to hear.”

He added: “The whole Eric Pickles period of ‘if only you pay your chief exec less and spend your reserves less you won’t have to make cuts’ was a lie at the time and it’s now done a huge amount of damage to the sector from which we need to recover.”

He also called upon councils not to claim that they were financially badly treated, using the example of financially-stricken Northamptonshire CC which issued a section 114 notice earlier this year. Mr Whiteman insisted the county had received an average level of revenue support grant for the county sector.

“Northamptonshire felt it was uniquely badly treated by government and had had a harsher settlement than any other organisation,” he said. “They felt that in every service, the members felt it, they felt it in the finance department but it isn’t true.”

  • 4 Comments

Readers' comments (4)

  • a drive to reduce the number of councils would help, every county could just become a unitary and unitaries merged, so Berkshire could become one unitary, metro areas could merge unitaries so they cover 500 populations. County areas with two unitaries eg derbyshire and bucks could become on unitary. People say its all politically impossible but it would save a massive amount of money and improve the quality of officer leaders and capacity. It could be one in twelve months with primary legislation and an independent commission driving it. Bigger towns and cities in larger unitary areas could retain most interesting unitary functions in a town council, eg housing,planning,leisure,parks and environmental services but council tax collection and all corporate services could be run from the county unitary. But most of all get on with it before everywhere is bankrupt and services fall apart. Health commissioning could be merged with the unitary councils. Plus a 20% tax on inheritance without a zero band for the first 350k would pay for social care.

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  • "He also called upon councils not to claim that they were financially badly treated, using the example of financially-stricken Northamptonshire CC ....Mr Whiteman insisted the county had received an average level of revenue support grant for the county sector." Interesting that the reference point is the average for the county sector, not the average of all authorities. The county sector is badly treated in terms of funding - could that possibly be why there is a steady trickle of counties reported to be in, or near to, financial difficulties - or is simply that the county class is somehow ridden with financial incompetence (and what does that infer for the quality of its CIPFA-qualified staff?).

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  • The first two responses to Rob Whitemans well judged comments smack of special interest pleading.
    The truth is ALL local government has been poorly funded but the situation in many(espescially Shire areas) has been made worse by falling into the trap of many years zero council tax increases.Many councils boasted about this at the time but their base is consequently that much lower now.Clearly this is only part of the funding problem but the short term political gain is some of the reason for the long term financial gain
    Equally if we are to have local government the clue is in the name LOCAL..Many shire counties are far too geographically vast to connect with some residents and if we wish to get the efficiencies said to go with size then we should go the whole hog and decide on regional Government
    Actually what is now needed is something like a time limited Royal Commission into the way all public services are provided and funded in the 21st century

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  • Are you sure that it is the truth that ALL local government has been poorly funded? Perhaps so, but I think not all have been as poorly funded as some parts of the country. So if counties that froze their council tax had taken the decision to increase their council tax instead, they would have even higher levels now to compare with the amazingly low amounts in many London boroughs. If London is as poorly funded as other parts of the county, how come they haven't had to charge comparable amounts - in many cases on properties worth millions? By the way, given that we are in the 21st century (and not the 19th), perhaps the idea of regional government might be a runner at some stage in the not-to-distant future?

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