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Jacqui McKinlay: Financial scrutiny must not be an afterthought

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If local government is to retain robust decision making, even in the face of continuing funding challenges, a culture that welcomes and values scrutiny will be key. It is an approach which should be present in the development of policy, at key points in the decision-making process, and as progress is monitored.

Scrutiny happens in many ways and, ideally, seeking broad involvement should be part of an organisation’s DNA. For elected members, formal scrutiny allows them to be the voice of residents in a visible, transparent way, holding to account where necessary.

Yet at the Centre for Public Scrutiny, we’ve long been concerned about the quality and depth of budget scrutiny in many councils. From our experience, it is generally poor. In our annual survey last year, 51% of respondents thought that financial scrutiny is not good enough or doing enough.

For too many councils, budget scrutiny remains something kicking off around November time, mostly happening in January, sometimes preceding formal cabinet sign-off of the budget by only a few weeks (and in extreme cases, only a few days).

This form of scrutiny is not only a waste of time and effort – it also does a disservice to elected members’ roles, and misses an opportunity for senior officers and members to test budget plans with councillors as they develop.

Shroud-waving about the lessons from Northamptonshire CC’s recent experiences is too easy a leap to make here, but unfortunately thoughts do unswervingly focus on their continuing experiences. It is worth reading the section on scrutiny in the best value inspection report. Failure creeps up on us. We can plough on with every confidence that we’re taking the right path – until suddenly it becomes apparent that we aren’t, and by then it’s too late.

The approach we suggest (and which we contend too few councils currently take) is one that involves councillors on scrutiny committees at the very earliest stages. The start of this financial year is the time to begin discussions and planning about these councillors’ involvement in the development of the 2019-20 budget.

So, what gets in the way? Lots of things – see the recent communities and local government select committee report into the effectiveness of local government scrutiny – but two consistent factors. Firstly, a legitimate concern about the political and organisational risks from “opening up” the budget development process to scrutiny.

But there is a need to consider how these risks weigh against those of not engaging as the budget comes to be agreed next year.

There is the risk, for instance, that political disagreement will lead to budget plans being derailed at the last minute. Or the risk that changes in political control might cause concern about the deliverability of the medium term financial strategy. And the risk the budget will not be informed by a wide range of perspectives which help decisions on competing policy priorities through intelligence from local communities – the kind of intelligence that councillors are well placed to provide.

The second main issue is councillors’ ability to provide high quality scrutiny when efforts are actually made to engage and involve them. Poor scrutiny can often be down to a lack of timely information and officer time. If councillors have to rely on information which is impenetrably drafted, late, or which never arrives, scrutiny is unlikely to be effective.

With that caveat in place, the fact remains scrutineers do also need to raise their game to match the complexity of the challenge faced by their council. Understand the problem, do the research, ask the right questions, work as a scrutiny committee team to add value through challenge.

It is easy to be dismissive about scrutiny’s ability to influence, but we can’t afford to carry passengers in this process. We need all parts of the decision-making machinery to be working at full strength as we enter a period of unprecedented uncertainty for council finances.

Nobody would disagree with the importance of reflection, challenge and constructive member-led oversight of the budget process. Now is the time to plan for it and make it happen. We’ll be working directly with many councils over the coming weeks and months to make budget scrutiny vital and meaningful, and to use that opportunity to secure and protect the services that are most important to local people.

Jacqui McKinlay, chief executive, Centre for Public Scrutiny

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