Local Government

1
Local Government

• Colin Sharpe CPFA
• Head of Finance
• Social Care and Health
• Leicester City Council

2
Areas to be covered

• Structure External and Internal
• Political Drivers
• Population Served
• Expenditure and Income
• Technical Guidance
• Key Accounting Features
• Capital Programme
• Budgetary Control
• Common Issues
• Further Information

3
LG Structure - External

• Different LG structure area by area
• County, District Parish (Leicestershire)
• Unitary Parish (Rutland)
• Unitary only (Leicester)
• Instructed and Regulated by
• Government Depts. (ODPM, DH, DfES, etc)
• CIPFA Codes of Practice and Guidance
• Inspectors, Performance Indicators and Auditors
  (CSCI, OFSTED, Audit Commission, etc)

4
LG Structure - Internal

• Each LA is a legal entity
• Full Council (all councillors)
• Political Leader / directly elected Mayor
• Cabinet (usually the majority political group)
• Scrutiny Committees (all political groups)
• Lord Mayor or Chairman (non-political)
• Chief Executive - the Head of the Paid Service
• Directors and Departments - Council Officers

5
LG - Political Drivers

• National Policy / Politics - school standards,
  direct payments, council housing, council tax...
• Local Policy / Politics - local issues, local -v-
  national politics, uncertainty over long term
  political direction, short term policies
• Councillors accountable to local electors
• Political restrictions on senior staff
• National drivers, local accountability

6
LG - Population Served

• Geographical area based (not necessarily the same
  as other local public services)
• Leicester City Council serves all people living
  within the City boundary
• 73,000 properties over 28 square miles
• 280,000 people, average age 37.6 years, many
  cultures and religions, new communities
• 23,000 council housing properties
• Significant deprivation in many wards
• Inner Outer Estates - different populations
  issues

7
LG - Areas of Expenditure

• English Councils spend 100billion per year
• Major services - including Education, Social
  Care, Highways, Planning, Housing, Sports,
  Leisure, Licensing, Inspections, well-being
• Driven by national policies and standards and
  local priorities
• Demand led - Housing and Council Tax benefits,
  social care services
• Delegated - Schools budgets (Govt. directs
  Councils to pass certain funding to schools)

8
LCC - Spending (Gross Budget)

• LCC spends 670m, with 14,000 staff
• Education - Schools 147m, Other 80m
• Social Care and Health 120m
• Housing - HRA 72m, Other 136m (benefits)
• Regeneration and Culture 73m
• Resources, Access Diversity 26m
• Corporate Budgets 7m
• Chief Executives Dept 2.5m

9
LG Income - Sources Certainty

• Core Funding
• Govt. Revenue Support Grant (RSG) - core funding,
  can be used for any purpose - national political
  tool
• Pooled Business Rates (NNDR) - effectively RSG
• Council Tax - set by the Council, generates about
  25 of core funding, so highly geared - political
• Other Income
• Specific Govt. Grants (targeted funds reimburse
  costs)
• Charges for services (statutory discretionary)
• Other External funding (Lottery, EC, Govt.
  Agencies)

10
Leicester City Council Income

• Core Funding of 380m
• Govt. Revenue Support Grant 220m (60)
• Pooled Business Rates (NNDR) 80m (20)
• Council Tax 80m (20) (low tax base in the
  City)
• RSG and NNDR to grow to 328m by 2007/08 (subject
  to future political priorities!!)
• Other Income 290m
• Specific grants other external funding
• Charges for services

11
LG - Technical Guidance

• Rooted in legislation
• CIPFA guidelines, codes of practice, etc must be
  followed
• Generally accepted accounting standards
• Audit Commission - sets external audit standards
• Government Departments
• Each LA sets its own accounting policies within
  this framework

12
LG - Key Accounting Features

• Limit on net budget (RSGNNDRCT) - capping
• Revenue account cannot go into deficit
• CFO personal statutory responsibilities - setting
  and maintaining a balanced budget
• DfES passporting of schools funding
• Other Govt. Depts expectations (financial, PIs)
• Specific grants - ringfencing
• Accruals based (with specific exceptions)
• Monitoring Officer - unlawful spending
• Capital - Prudential Framework

13
LG - Capital Programme

• Supported Capital Expenditure
• Prudential Framework / Code
• Government Grants
• Capital Receipts
• Revenue Financing
• PFI - Traditional, NHS Local Improvement
  Finance Trust, Building Schools for the Future
• Other External Funding
• Accounting Arrangements

14
LCC - Budgetary Control

• Council approves the annual budget
• Finance Procedure rules - process delegation
• Management hierarchy applies
• Directors responsible for staying in budget
• Departmental Heads of Finance - responsible to
  Departmental Director and the CFO
• Comprehensive in-year reporting at all levels -
  cost centre managers, services, Divisions,
  Departments and Council overall, Scrutiny
  Committees and Cabinet

15
LG - Common Issues

• Partnership working - with NHS, Probation,
  Police, voluntary sector, business, community
  organisations
• Whole of Government Accounting change to the
  year-end accounts timetable
• Political influences and demands
• Ever increasing needs and expectations
• Enforced structural changes

16
Further Information

• Leicester CC www.leicester.gov.uk
• e-mail colin.sharpe_at_leicester.gov.uk
• ODPM www.odpm.gov.uk and other
  Government Departments
• CIPFA - www.cipfa.org.uk
• Public Finance Magazine www.publicfinance.co.uk
• Documentation to take away