The appointment of a new chief executive, finance director or political leader could provoke an independent review of finances under plans mooted by Rob Whiteman.
Following a spate of council collapses, the Charted Institute of Public Finance and Accountancy (CIPFA) chief executive claimed the recruitment – or election – of new personnel could provoke a resilience review in a bid to catch failures before they happen.
Writing in The MJ this week, the CIPFA boss also raised concerns that too many financial failures could risk ‘normalising’ section 114 notices.
He said there was risk of a ‘double hazard,’ with councils no longer fearing the stigma of a s114 and central Government increasingly concerned that bailing out authorities could incentivise risk.
Mr Whiteman warned a subsequent stand-off between central and local government could provoke ‘game of chicken that will end with some flattened and bloodied feathers’.
The CIPFA boss suggested several more councils were now edging closer to collapse due to rising pressures.
But he added it was still those that were over-optimistic with their budgets or with poor governance that currently risked s114 notices.
While more councils may still go bust due to commercial investments made before rules were tightened, Mr Whiteman said he believed excessive risk had now been curbed, and pressure from adults’ and children’s social care may be more of a problem.
He continued: ‘I see some councils that could avoid failure but are still not taking that critical first step.
‘Sooner or later we will reach a point when a well-managed authority, whose costs benchmark well and resources [are] managed effectively, hits the buffers through a lack of funding to meet service demands.’
