Traffic light financial ratings for councils ‘blunt instrument’

Responding to a consultation on ‘traffic light’ financial reliance plans for councils, county leaders have labelled the ‘well intended’ proposals as a ‘blunt instrument’ that offer no genuine solutions to councils who could be deemed ‘failing’ by the index’s standards.

The system would provide an assessment of each councils’ financial health, based on a financial resilience index, giving each council an amber, green or red ‘traffic light’ assessment.

However, the County Councils Network (CCN) and the Association of County Chief Executives (ACCE) says that the proposals, revealed by the Chartered Institute Public Finance and Accountancy, risk over-simplifying complex issues and will not take into consideration other factors, such as organisational culture, local democratic accountability, the historical approach of a place and the importance and dependency of working with partners in a locality.

The grouping of county chief executives argue that as financial resilience can be calculated in a number of different ways, using a variety of different indicators, it may be difficult to get a wholly accurate picture on how well a local authority is performing.

County leaders and chief executives say they instead want to work with CIPFA to create an approach that supports learning, support and innovation across the sector

Richard Flinton, lead advisor for local government finance at ACCE, and chief executive of North Yorkshire County Council, said: “Councils’ future financial stability has been a recurring theme in local government this year, and these well-meaning proposals are unsurprising in the current climate. However, we believe they will be a blunt instrument, which over-simplifies complex issues and offers no genuine solutions to councils’ financial issues.

“Naming and shaming local authorities, based on a particular dataset, could be counter-productive in the long-term when we should be looking at how, and where extra support to specific local authorities can be provided. It’s no bad thing to have these type of discussions, and the ACCE is open to new measures to help improve financial resilience, but we believe alternative proposals could be far more effective. We look forward to engaging CIPFA during the consultation period on their proposal.”