Audit Commission warns Brent Council of 'significant risks'

A year ago I reported that Brent Council's reserves were the lowest of the London boroughs. LINK As the Council implemented cuts last year they also, controversially, began to build up the reserves. The Audit Commission's Annual Audit Letter 2010-11 on Brent Council's financial position, which is tabled for tonight's Executive, gives the Council only an amber rating based on their 'traffic light' system. The level of Council's reserves continues to give the Audit Commission cause for concern as well as the Council's capacity to deliver the planned savings. The Council is likely to use this Letter as justification for not using reserves to mitigate some of the most damaging cuts.

Andrea White, District Auditor. in a key passage states:

My overall conclusion is that the Council has adequate arrangements to secure, economy, efficiency and effectiveness in its use of resources.

 

My value for money conclusion is based on evidence that confirms the Council has sound financial planning and monitoring arrangements in place, and it has the leadership and governance structures to enable it to deliver its plans. 

However, there are significant risks to achieving the scale of savings required. The Council's medium term financial strategy has identified the need for a further £65 million savings over the next three years. These substantial savings will have to be delivered against a background of increasing demand for council services and reduced management capacity. Clear focus on delivering operational and financial priorities will be needed to ensure financial plans are delivered and the effectiveness of services is maintained. 

The Council’s general reserves are low and earmarked reserves are falling while pressure on the Council’s resources in the coming years is significant and unprecedented. The maintenance of strong financial control will be essential if the Council is to achieve its plans. When setting its budget for 2012/13, the Council must continue to have regard to the increasing level of risk in setting its reserves.

In unguarded moments councillors lament the 'almost impossible' position they have put in by the level of cuts demanded by the Coalition's reduction in their budget.  They are now contemplating a massive reduction in the role of local government, and a consequent withdrawal from some service provision and the privatisation of others. As the Auditor says "These substantial savings will have to be delivered against a background of increasing demand for council services and reduced management capacity." Cuts in provision will occur as demand for provision is increasing.

In shrinking the role of the Council they are in a way contributing to their own demise. A very real question is now being asked about exactly how many people will be left to move into the Civic Centre in 2013.