Councils cannot expect additional funding and must take a ‘reasonable approach to risk’ in the face of growing budget gaps, the senior official from the Department of Levelling, Housing and Communities has urged.
Permanent Secretary Jeremy Pocklington has reiterated warnings that councils should not expect additional funding from central government to deal with inflation, rising social care costs and the crisis in the cost of healthcare life.
Speaking at the Chartered Institute of Public Finance & Accountancy conference yesterday, he said it was now more important to focus on ‘value for money’ because: ‘As families struggle to grow the money, they will expect those who spend their money to do so with even more care.
This means that the focus should be on cost control across the board.
“We do not expect significant additional funding to deal with [budget pressures] so it’s doubly important that strong financial management and cost control is built into every part of consulting, including service delivery, to help you overcome these hurdles,” said Pocklington.
He acknowledged that councils face “a double-edged sword of rising inflation and shrinking budgets”, which may mean they will be “tempted to find creative ways to relieve pressures on budgets”.
But he warned them to ensure any approach is “balanced with a sensible approach to risk and ensuring value for money”.
He told delegates: “The winter pressures we face this year will be significant. But I am confident that with early and effective planning, we can rise to the occasion.”
Greg Clark is a “passionate champion”
Mr Pocklington was speaking a week after Boris Johnson sacked Michael Gove as leveling secretary, before stepping down and plunging the Conservative Party into a leadership race.
He said: “I understand that the recent turmoil in national politics and the uncertainty it creates is a challenge for all of us, especially against the backdrop of grave challenges.”
He tried to reassure the public that new upgrade secretary Greg Clark is a “passionate champion.”
“He has the highest regard for the agenda set by Michael Gove and that together we will continue to deliver on it as we await a new prime minister and a new administration,” he said.
Over the next few weeks, the government will continue with existing plans, including the Leveling and Regeneration Bill, which includes new powers for the government to “intervene early before the council loses its grip on its finances”.
Mr Pocklington said ‘the vast majority of the industry is doing the right thing’, but added that some were ‘taking excessive risks without proper safeguards’.
He called on finance professionals to report any concerns about the council’s finances as soon as possible.
“The financial profession has a valuable role to play in speaking truth to power, particularly when there is a lack of clarity or direction within your board,” he said. “I understand that it’s not always easy; the role of Section 151 officers and their teams can be lonely.
Too many public funds
In response to a question, Mr Pocklington acknowledged there were too many separate funds for councils to bid on, adding: ‘We are aware that the number of government funds is in the hundreds now.’
This represents a “significant burden” and he said DLUHC plans to “work closely with the sector to see how we can simplify the funding landscape”.
He added: ‘Too much money robs leadership of valuable time to do what you do best, which is to serve your local community.’
He admitted that the bidding process “could favor some advice” and said the DLUHC was considering alternative approaches, such as the indicative process used for the shared prosperity fund or the provision of increased funding for capacities.
On the issue of delays with the second round of the leveling fund, Mr Pocklington said the portal would ‘open very soon – within the next few days’.
He added that DLUHC had “designed a simplified system around this” and applicants will have another two weeks to submit offers.
Mr Pocklington declined to give an update on the future of the new home bonus scheme, which worries housing authorities as it is a decision ‘for the new administration’.
The government has not confirmed whether there will be a new round of bonus payments for new homes in 2023-24.