Thomas Bridge 20 January 2016

Councils less optimistic about coping with future cuts

Councils less optimistic about coping with future cuts image

A new report into the future of financial management has revealed that councils are less optimistic about coping with upcoming cuts than they were in dealing with past spending reductions.

The report from the Chartered Institute of Management Accountants (CIMA) found a number of councils are anticipating they will undertake a significant rethink of their approach to financial management.

This is expected to take the form of stronger integration between strategic, operational financial management, improved decision-making in partnerships and multi-agency working, and strengthened financial self-sufficiency.

The Governmental Financial Resilience Under Austerity report said the local authorities analysed – Manchester City Council, Warrington BC, Wigan Council and Derbyshire CC – ‘appeared to be less optimistic about their ability to respond to the next wave of cuts, and future years are seen as potentially difficult’.

It said the 2008 financial crisis had been a ‘turning point’ on delivering council services and budgets, where ‘past ways’ were ‘swept away and explorations for new approaches started’.

Comparing current attitudes to those held by councils eight years ago, the report said income generation had become a ‘much more integral and acceptable (although not always palatable)’ part of financial planning.

Similarly the ability of councils to ‘read the tea leaves’ and forecast the impact of major financial shocks has been ‘developed and learnt’ over time.

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