LGA resources can help councillors ensure value for money
All councils will be in the middle of setting their budgets for 2025/26, following the publication in December of the provisional local government finance settlements for England and Wales.
Councillors have a key role to play in ensuring value for money in everything their local authorities do, but the budget process can be daunting and complex.
The LGA provides resources and training to help with this, including recently updating its ‘Councillor workbook on local government finance’. This sets out the legislative and wider context, looks at financial planning and budgeting, and discusses the roles and responsibilities of councillors.
It also covers sources of revenue and capital funding, and the differences between them, reserves and balances, and specific areas such as the housing revenue account (for councils that own council housing), school budgets, the public health grant, the adult social care council tax precept, and other ‘ring-fenced’ budgets.
Every council requires money to finance the resources it needs to provide local public services. Therefore, every councillor should take an interest in the way their council is funded and the financial decisions it takes.
Legislation is clear that every councillor is responsible for financial control and decision-making at their council.
The Local Government Act 1972 (Section 151) requires every local authority to make arrangements for the proper administration of its financial affairs, while the Local Government Act 2000 requires full council to approve the budget and council tax demand.
However, it is recognised that councillors may well not be financial experts and so legislation also requires that every council has a named and suitably qualified ‘responsible financial officer’, known as the council’s ‘Section 151 officer’.
This person is usually the head of the council’s finance function and is central to providing:
- effective financial advice to councillors and officers
- organising and maintaining a sound system of financial governance and control
- ensuring the council follows all of its legal duties in financial matters
- preparing and approving a budget.
A sound budget is essential to ensure effective financial control in any organisation and the preparation of the annual budget is a key activity at every council.
The central financial issue at most councils is that there are limits and constraints on most of the sources of funding open to them. This makes finance the key constraint on the council’s ability to provide more and better services.
What is the councillor’s role in all of this? Put simply, it is to consider finance and funding as a central part of all decision-making and to ensure that the council provides value for money, or ‘best value’, in all of its services.
There is unlikely to be sufficient money to do everything the council would wish to provide, because of its budget gap.
Therefore, councillors need to consider their priorities and objectives, and ensure that these drive the budget process. In addition, it is essential that councils consider how efficient they are in providing services and obtaining the appropriate outcome for all its services.
- ‘A councillor workbook on local government finance’ is one of a suite of similar distance learning aids available on the LGA’s website, covering everything from chairing skills to working with town and parish councillors. To access the LGA’s full range of training, support and events, designed for new councillors to experienced leaders, please visit our councillor hub.