County chief executives have warned that a proposed traffic light ranking of councils’ financial resilience will be a ‘blunt instrument’.
The Chartered Institute of Public Finance and Accountancy (CIPFA) has launched a consultation on a proposed resilience index in response to Northamptonshire County Council’s freezing of council spending.
CIPFA is proposing to use a range of indicators for the index, including the rate of depletion of resources, level of resources generally, demographic and social services pressures and level of borrowing.
However, the Association of County Chief Executives (ACCE) and the County Councils Network (CCN) have warned these ‘well intended’ proposals risk over-simplifying complex issues.
The index will be a ‘blunt instrument’ that fails to genuinely help financially struggling councils and will not aid the sector in tackling the main issue of insufficient funding, said the ACCE.
The CCN added that as financial resilience can be calculated in a number of different ways, using a variety of different indicators, it may be difficult to get a wholly accurate picture on how well a local authority is performing.
CIPFA’s proposed index, the CCN continued, will not take into consideration other factors, such as organisational culture, local democratic accountability, the historical approach of a place and the importance and dependency of working with partners in a locality.
Richard Flinton, ACCE lead advisor for local government finance, and chief executive of North Yorkshire County Council, said: ‘Councils’ future financial stability has been a recurring theme in local government this year, and these well-meaning proposals are unsurprising in the current climate.
‘However, we believe they will be a blunt instrument, which over-simplifies complex issues and offers no genuine solutions to councils’ financial issues.
‘Naming and shaming local authorities, based on a particular dataset, could be counter-productive in the long-term when we should be looking at how, and where extra support to specific local authorities can be provided.
‘It’s no bad thing to have these type of discussions, and the ACCE is open to new measures to help improve financial resilience, but we believe alternative proposals could be far more effective.’
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