Councils in Wales are improving their medium-term financial planning

Tuesday, June 13, 2017 - 3:18pm

But some shortcomings are threatening savings targets, says Auditor General

The majority of councils in Wales have improved their medium-term financial plans and now have an effective approach to forecasting the savings they need to achieve. That is according to a report, published today, by the Auditor general for Wales. It also found that there is still more for councils to do in planning how they intend to bridge the funding gap that they have identified, which undermines their medium-term financial plans.

The report, Savings Planning in Councils in Wales, follows up on earlier work conducted in 2015-2016 and focuses on how councils identify, plan for and deliver savings. This included examining councils’ financial planning arrangements, the extent to which they achieved their 2015-16 savings plans and the work undertaken to ensure robustness of their 2016-17 approach.

The report found that over half of councils have well-considered and effective savings plans for 2016-17, but the others do not, and they may fail to achieve their in-year savings targets. The main reason for non-achievement of specific savings plans related to over-ambitious savings targets which were not underpinned by robust delivery plans.

The latest report also found:

  • All councils again delivered a balanced budget in 2015-16, but not necessarily as planned. Councils used a variety of methods to balance their budgets which included use of reserves, underspends from within the other service areas, and unplanned income.
  • Collectively, councils planned to save £251.6 million in 2015-16. However the total amount saved amounted to £221.5 million, (88%) of that target.
  • The most frequently made proposals for improvement included encouraging councils to ensure savings proposals were fully developed, risk assessed and included realistic delivery timescales before inclusion in the annual budget.

The report reinforces the concern, raised in previous years, that failure to achieve planned in-year savings places a strain on budgets which may be unsustainable. With the majority of future savings likely to come from service change and new ways of working, which are harder to achieve and require longer lead-in times, this situation may worsen and compromise councils’ financial resilience in the longer term.

Auditor General, Huw Vaughan Thomas said today:

“Welsh councils have generally managed to reduce expenditure and balance their budgets in line with austerity measures since 2010. However, the scale of annual budget reductions is likely to continue, so I hope that councils will consider the recommendations laid out in this report, and those included in their specific local reports, to offer realistic and robust savings proposals and meet continued reductions in funding.”

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