The Chartered Institute of Public Finance and Accountancy (CIPFA) has today (2 July) released a consultation on its plans to launch an authoritative measure of local authority financial resilience through the creation of a new index.
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.
CIPFA is working closely with the sector to decide how the index should work and what criteria should be included in the ratings and to do so is consulting widely.
After the consultation period, which closes on 24 August, CIPFA expects to produce the first edition of the resilience index in the early autumn this year.
Commenting on the announcement, Rob Whiteman, Chief Executive of CIPFA, said:
“Local government has faced unprecedented financial challenges in recent years that are likely to remain well into the next decade.
“Despite the financial strain, councils have been able to deliver core services and manage their balance sheets more actively than other parts of the public sector. But, unfortunately, financial management capabilities and sharing good practice have at times been hollowed out by the repeated need to cut budgets.
“And so, CIPFA believes there is a need for appropriate and robust independent challenge and support of some councils on financial strategy and trajectories through this new resilience index which is intended to provide challenge where needed so that appropriate action can be taken at a local level.”
The index forms part of a broader strategy the Institute has for ensuring council finance leaders have the support needed to achieve a balanced budget. In conjunction, CIPFA has also begun development of a new Financial Management Code to accompany the existing Prudential and Treasury Management Codes.
In conjunction, CIPFA has also begun development of a new Financial Management Code to accompany the existing Prudential and Treasury Management Codes. The Code will be developed with help from treasurers’ societies and relevant bodies including the National Audit Office, audit firms, Local Government Association (LGA) and Ministry of Housing, Communities and Local Government (MHCLG).