Council to change finance approach after review

By Paul Marinko | 07 August 2019

Warrington BC has ‘consistently overspent’ against parts of its budget and needs to change its approach to deliver services ‘from a more sustainable financial footing’.

These were among the findings of a Local Government Association (LGA) corporate peer challenge just released by the authority.

The report called on the council to ‘re-design the budget process so that it is genuinely medium-term and includes the development of more considered savings options beyond the next 12 months’.

It pointed out that Warrington’s Government funding had been cut by £137m since 2010 and the council now needs a further £22m of savings or efficiencies this year, equivalent to 16% of the total budget.

Another £23m is needed in the following three years.

While it recognises that the council is working hard to avoid the situation continuing, the report read: ‘In recent years council services have consistently overspent against the budget and failed to deliver planned savings in full.

‘It is the clear view of the peer team that the budget approach taken to date should be redesigned to ensure the council is able to deliver services from a more sustainable financial footing.’

Warrington’s decision to ‘off-set some of the decisions that other councils have been forced to take through the use of an ambitious investment strategy’ was also examined by the LGA.

The investments include the £211m acquisition of a science and business park, £275m of loan facilities being put in place with 10 housing associations and the £30m purchase of a 33% share in Redwood Bank.

Peers concluded: ‘Such is the pace of commercial income growth in Warrington and the complexity that comes with it, the team believes that the council should seriously consider commissioning an independent review of its approach to risk management and commercial decision making.’

Responding to the review, which was initially carried out in March, Warrington leader Russ Bowden said: ‘The purpose of the visit was not to seek validation of our current processes and the positive work we continue to do, but to scrutinise and identify potential improvements we can make for the future.

‘It’s clear we have some difficult decisions to make as we continue to face our continued, austerity-driven budget pressures, and we need to ensure we are agile and able to cope with future demands.’

A council spokesman said: 'As is the case for local authorities up and down the country, Warrington has faced the brunt of imposed austerity with funding cuts of more than £137m since the turn of the decade, which equates to 60p in every £1 of funding lost.

'Despite this, the council delivered only a small overspend last financial year, with underspends delivered for the previous six years before that.

'Independent assessments are always undertaken before any investment decision is made.

'Our robust governance processes ensure that when considering each investment, extensive external advice is sought and comprehensive due diligence is conducted.

'We have also recently welcomed an independent financial assessment from the LGA off the back of the peer challenge, which noted a number of positive steps we’re taking to further improve our budget monitoring processes.'

The LGA found ‘good, open working relationships between members of all parties’ at the authority, which it described as ‘a real asset’ to meeting the ‘financial challenge’.

Its report said the challenge will ‘require transformation and modernisation that goes across service areas’ and a change from the current ‘siloed approach’.

Cllr Bowden took over as leader of the Labour council in November and the LGA challenge team urged the authority to seize the opportunity to 'communicate a new political vision’.

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