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Ed Hammond: The two essentials for successful budget scrutiny

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Last week, we at Centre for Public Scrutiny (CfPS) hosted, with the Chartered Institute of Public Finance & Accountancy, our inaugural finance conference for councillors. 

It has become a bit of a cliché to talk about the unprecedented / existential / (insert your preferred doom-laden word) pressures placed on local government by its current financial challenges. But amidst all of the talk of crisis there has been little of the critical role that elected members play as councils continue to develop their budget for next year.

I have spoken both to groups of councillors and groups of finance professionals about this challenge. It is safe to say that there is a gap of understanding between the two.

On the one hand, councillors know that they need better oversight of budget and finance issues – finance is an issue for the whole council, not just cabinet. On the other, officers know and understand that councillors might want this oversight but struggle to think of how to build it into the system intelligently.

There is will, therefore, on both sides, but a lack of capacity to effect the change needed, and on the member side a fear that ‘proper’ scrutiny might involve the need for accountancy skills, which frustrates action. So what’s needed?

We have talked a lot about the need for budget scrutiny, in particular, to be a year-round business – both monitoring the budget in-year and overseeing the development process for next year. But for this scrutiny to work itself needs two prerequisites: the provision of timely, accurate information to support the process, and the provision of training and support for members.

This support isn’t about making councillors finance experts, but giving them the confidence to ask the right questions – the kinds of questions which will enable scrutiny to play a valuable role in identifying risks, challenging assumptions and overseeing budget decisions. Currently in many places it is an expensive distraction.

Max Caller’s Northamptonshire CC inspection report clearly articulated the role that poor budget and financial-related scrutiny played in their current situation. This week the county will consider our advice and proposals to restructure their scrutiny function to support their transformation over the next two years.

In summary, we are proposing a halting of current scrutiny work and abolition of their committee structure. This should be replaced with a single new scrutiny committee focused on the budget and recovery plan. Membership should be selected with a focus on the skills and capability needed for the role.

A radical set of measures for what is (currently) a unique situation but this approach will allow scrutiny to focus on what matters most to the residents, communities, council and wider area. It will also allow precious council resource to be concentrated on providing the information and support members need to scrutinise effectively.

All councils and councillors have a duty to get this right. At the moment there’s a gap here, and an urgent opportunity.

Ed Hammond, director, Centre for Public Scrutiny

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