Balancing Local Authority Budgets

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There have been considerable changes affecting the finances for local authorities in recent years, many of which have resulted in the streamlining and modernising of their administrative functions. Authorities have found innovative new ways of delivering services and finding different routes to generating income.

This drive for efficiency is nothing new to the public sector but local government now faces further challenges in its ability to both deliver services and balance budgets. Financial pressures have increased for authorities in line with demands on public expenditure, not least in the area of social care. Following the spending review in 2015, authorities also now need to plan for the phasing out of the Revenue Support Grant by 2020.

The 100% localisation of business rates will not happen until 2020 and may not be the immediate financial panacea for all. The next four years is going to be difficult for all authorities but especially so for some and solutions would be to look at long-term financial planning, demand management and the generation of alternative sources of income.

This publication reviews the current financial challenges faced by local authorities and looks at what they need to consider should it look as if their budget will not balance. It explores options available to balance the budget including the implementation of a spending freeze, as well as considering the options and implications of submitting a Section 114 report.

This publication will be of interest to readers new to the subject and those already involved in public finance and financial planning, including students, internal and external auditors, chief finance officers and council members.

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