Agenda item

Members gave consideration to a report from the Assistant Director of Finance, Business Support and Property Services (S151 Officer), explaining that the Chartered Institute of Public Finance & Accountancy (CIPFA) had introduced a new Financial Management Code (FM Code) which set out for the first time, the standards of financial management for local authorities. Members heard that the FM Code was designed to support good practice in financial management and to assist local authorities to demonstrate their financial sustainability

It was explained that although local government finance in the UK was governed by legislation, regulation and professional standards, the general financial management of a local authority had not, until now, been supported by a professional code. The FM Code had been introduced because the exceptional financial pressures faced by local authorities in recent years had revealed concerns about fundamental weaknesses in financial management and the ability of some organisations to maintain services in the future. Whilst there was much good practice across the sector, any failures threatened stakeholders’ confidence in local government as a whole and more importantly, posed a risk to the services on which local people relied.

CIPFA’s intention was that the Financial Management Code (FM Code) would have the same standing as the Prudential Code for Capital Finance in Local Authorities (CIPFA, 2017), which promoted the financial sustainability of local authority capital expenditure and associated borrowing. This meant that although the FM Code did not have legislative backing, it applied to all local authorities whilst recognising recognises that some had different structures and legislative frameworks. Where compliance with the Code was not possible, adherence to the principles was still considered appropriate.

The Assistant Director of Finance, Business Support and Property Services (S151 Officer) highlighted section eight of the report, explaining that the actions were intended to enhance the compliance of the council.

Members of the Committee enquired as to the reasons behind the amber markers in relation to stakeholder engagement and whilst the impact of the pandemic was partially to blame, it was explained that the wider issue was that stakeholders were not engaged. There had not been the desired response to budget consultations and this had highlighted the need for directed consultation with businesses. This would be picked up through the 22/23 consultation period.

In response to the Chairman asking how completion of the proposed action plan would be managed and reported to Members, it was explained that the actions would be included in both the Annual Governance Statement as well as the usual Progress and Delivery reporting methods. There would also be a report to the Committee at the end of the financial year.

Members enquired about specifics of the Code, whether there was a council-wide approach or if it related to individual teams or Managers, specifically in relation to the ‘financial management style’. It was clarified that there was a council-wide approach and the Code was relevant to strategic financial management style, not people or teams, in relation to financial strategies and risk appetite.

With no further comments it was

RESOLVED that the Committee be assured that West Lindsey District Council meets the standards of the Financial Management Code as evidenced from the self-assessment and accept the actions required to be undertaken in 2021/22, which will enhance this compliance.