Finance experts have called on councils to watch out for signs of financial stress and given advice on how to manage their budgets effectively.
The Chartered Institute for Public Finance and Accountancy (CIPFA) says a survey of local authority chief financial officers revealed serious spending pressures after austerity had 'battered the sector for close to a decade'.
In its report Building Financial Resilience, CIPFA identifies five 'key symptoms' of financial stress:
- A rapid decline in reserves
- A failure to plan and deliver savings in service provision
- Shortening of medium-term financial planning
- A lack of firm objectives for savings
- A tendency for unplanned overspends
Tips for greater resilience include making sure financial management systems are working effectively, using benchmarking data, creating a single savings plan and managing reserves properly.
Sean Nolan, director for local government at CIPFA, said: 'Austerity has battered the sector for close to a decade while increased demand and cost pressures have left some councils at the brink.
'Other, more positive changes, such as a trend towards greater self-sufficiency and local leadership have allowed some areas to flourish, while others have struggled to reap the benefits of these reforms.
'What we are seeking to do now is to help councils spot the warning signs of financial stress and take the right steps towards resilience.'