Recovery audit specialists, Rockford Associates, discuss how increasing financial pressures are impacting local councils, the services they provide, and, therefore, the welfare of residents, and how their company can help
The crisis in local council finance in the UK has intensified. High-profile cases have hit the headlines as local councils, including Woking, Birmingham, Kent, and now Nottingham, have struggled to balance their budgets.
As the UK Government continues to reduce expenditure and has introduced local financial self-sufficiency after the 2008 crash, local councils are forced to find savings and new income sources to close funding gaps.
The scale of the pressures councils are facing cannot be solely met by reducing costs, making efficiencies, or raising council tax. Rather than cutting vital support to the most vulnerable in our communities, councils urgently need adequate funding to meet the demand for services. A long-term plan is required. Inflation will not come
down overnight. Reserves can only be spent once, and a local service cannot be cut twice.
Funding
Austerity measures and cuts in central government grants have significantly reduced financial support to councils. This reduction in funding and rising costs pose a formidable challenge in maintaining service levels without compromising quality.
“Councils are facing an inflationary storm which is adding unsustainable costs onto council budgets. Some councils have warned these costs are threatening their financial sustainability, not least because councils have already absorbed a 27% real terms cut in core spending power since 2010/11.”
– Local Government Association – Oct 23
Increasing demand for services
Local councils shoulder the responsibility of delivering a broad spectrum of crucial services, from social care for vulnerable individuals to maintaining roads and waste management. However, the demand for these services continues to surge. Population growth, demographic shifts, and societal changes have led to heightened expectations, straining already stretched resources.
Impact of COVID-19
The COVID-19 pandemic exacerbated the financial strain on local councils. Increased demand for support services, emergency response, and economic recovery efforts intensified pressures on already constrained budgets. Simultaneously, revenue streams, such as council tax and business rates, faced disruptions due to economic slowdowns and reduced commercial activity.
Rising costs and budgetary constraints
The cost of delivering services continues to rise, outpacing revenue growth. For instance, social care costs, a significant portion of council spending, have surged due to an ageing population and increased care needs. Meanwhile, councils face limitations on raising additional revenue through council tax, constraining their financial flexibility.
“Just under a third of local authorities may not be able to deliver their in-year budgetary position, while half of s151 officers are not confident in their organisation’s ability to deliver a balanced budget over the course of their MTFP (Medium-term financial plan). And more than one in ten of these officers are concerned they will need to issue a s114 notice during the MTFP period.”
– EY – Section 151 Confidence Barometer 2023
Services and communities
The financial pressures on local councils directly impact the services they provide. Reductions in funding often result in difficult choices, including service cuts, reduced maintenance, or delays in infrastructure projects. These cutbacks have tangible effects on communities, potentially affecting residents’ quality of life and welfare.
Innovative strategies
In response to these challenges, councils are adopting innovative strategies to mitigate financial strains. Collaboration and shared services among councils, exploring alternative revenue streams, implementing efficiency measures, and embracing technology to streamline processes are among the approaches being pursued.
Local councils play a crucial role in fostering thriving communities and delivering vital services. However, the mounting financial pressures they face threaten their ability to meet growing demands effectively. Balancing fiscal constraints while maintaining service quality remains a complex and ongoing challenge that requires strategic support from central government and collaborative agreements with their supply chain.
How Rockford Associates can help
Rockford’s Accounts Payable and VAT Recovery Audit service provides a thorough and independent review of historical payments made to all third- party suppliers. Better, the service is self-financing, risk-free, requires no client budget and can ‘map in’ and complement National Fraud Initiative (NFI) routines undertaken by all local authorities.
Services include:
- Accounts payable and VAT audit • Supplier compliance audit
- Energy audit
- Telecoms audit
- Statement reconciliation
Utilising in-house forensic software to uncover overpayments resulting from:
- Goods or services being paid for twice
- Payments being made to the wrong supplier
- Payments being made in the wrong currency
- The by-passing of existing software duplicate checks
- The same invoice being paid across different Accounts Payable systems, divisions or ledgers
- Credit notes being paid as invoices
“Having just completed record recoveries over the last four years working with the Crown Commercial Service, we are now focused on building on that success by assisting public sector organisations to identify and recover historical overcharges and help them make ongoing savings in the future.”
– Ray Dorney, Director – Rockford Associates
To find out more and how you would benefit from a risk-free review delivered by Rockford Associates, or if you would like to see some case studies of how we have assisted other Councils across the UK, please click here or see our contact
details below.
This work is licensed under Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International.
