Letter: Councillors Need Sound Financial Advice and Readable Reports

Published on: 8 Mar, 2024
Updated on: 7 Mar, 2024

From: John Murray

In response to: Have You Received Your Council Tax Bill? – Lessons from Austerity and Beyond

One can only agree with Bernard Quoroll about the dangers of property investment, which has the added disadvantage of being non-liquid and thus puts a lot of money beyond use. It is not all downside, of course, Guildford gets over £9 million in income from its property investments but it does have an awful lot of its assets tied up in property.

As regards the attitude of councillors to financial matters, Mr Quoroll may well be right but I wonder if he has had the courage to confront the 275-page budget document with which our elected members had to struggle in February.

It is a rambling, repetitive discourse that is difficult to follow even for someone experienced in financial matters. After many years of both writing and reviewing business plans I have never seen anything like it. It is too long by about 250 pages. If councillors baulked at this task one can hardly blame them.

Even if some arcane rule of local authority accounting requires this sort of output, there is surely nothing to stop officers producing a summary of the main items: revenue account, cash flow and borrowing, reserves movement, capital accounts and balance sheet (some of which do not actually appear) and showing the links between them. As it is, capital accounts are considered as separate agenda items as though they were nothing to do with the rest of the numbers!

In the case of Woking, it seems to be agreed that councillors were badly served by the officers. This does not excuse their failing to ask how the debt was going to be serviced and repaid and refusing to proceed if no satisfactory explanation was forthcoming but it is easy to see how a dangerous confusion can arise.

Responses to Letter: Councillors Need Sound Financial Advice and Readable Reports

Bernard Quoroll Reply

March 8, 2024 at 6:40 pm

The solution to John Murray’s point, with which I have some sympathy, is not rocket science. If councillors need information to be produced for them in a clearer, more succinct format, they can and should insist on getting it. But I was making a different point.

Good financial management is not just about strategic decisions made at the annual setting of the Council Tax. It is much more about having clear rules and systems for financial management and control and about the regular reporting of income and expenditure against budgets. By its own admission, GBC failed to do that in a timely way and lost the ability even to blow the whistle on its failures quickly enough after outsourcing its central audit staff to departments in a failed restructuring.

Most organisations pay attention to what their leaderships say and demonstrate is important. Local government is no exception. In councils, that should mean having systems at managerial level which can check regularly, whether the organisation is performing to target and recommending timely changes if it is not. It also means having systems in place to receive those reports at a political level and react to them. That should be happening in every cycle of committee meetings after the second month of the financial year. Doing so throughout the year makes it much easier to respond to changed circumstances and hopefully avoid sleep walking into a crisis.

My point was that elected councillors do not, in my experience, want to give so much time to the mundane business of managing performance, except when things go wrong. Their focus tends to be on opportunities to make decisions about matters which earn or lose votes or which get their political juices going.

The real test of accountability comes however in the attention and priority they pay to oversight mechanisms such as their performance management system which I understand is still work in progress in GBC. So the questions to ask are, do the right committees get performance reports; are they structured to clearly identify divergences from expectations; are such divergences and the responses needed, then actively debated and routinely acted upon as opposed just to being noted; do performance reports appear on agendas early enough to encourage energetic engagement before people start looking at their watches and so on.

These are the “outward signs of inward grace” which would give me more confidence that GBC will not just slip back into old ways,

Councillors are busy people and take on an enormous commitment when they seek election. They also are not given enough credit for the conscientious contribution they make to the local community. But as I have said before, failing to manage is managing to fail.

Finally and in response to Mr Murray, councils would not need to consider acquiring such large investment portfolios if their revenue streams were stable and properly funded which has not been the case since 2010. Doing so is not their primary purpose. They can certainly justify acquiring some land for service provision, such as future school sites or holding land to promote essential redevelopment but those are service related purposes.

Acquiring property to keep the council tax down is in my view not the best use of public money and probably one which I suspect earlier Conservative governments would not have supported.
John Perkins Reply

March 9, 2024 at 5:45 am

Since the advent of cheap computing, most official reports have adhered to the principle of “never mind the quality, feel the width”.