Memorandum by the Society of County Treasurers
The Society of County Treasurers (SCT) welcomes
the opportunity to submit evidence to the Environment Sub-Committee.
The Society includes and represents the Chief
Finance Officer of each Shire County Council.
Sound financial governance must be at the heart
of the new political arrangements which local authorities are
introducing. It should be part of the culture and ethos of each
and every authority.
Within this, the role, position and influence
of the Chief Finance Officer is a key consideration. The SCT strongly
endorses the point made previously by CIPFA that it is up to each
local authority to satisfy itself that its management arrangements
are consistent with the law. In doing so, each authority should
satisfy themselves that their arrangements are consistent with
good corporate governance and that the authority and corporate
management team have sufficient access to financial information
This principle is paramount. The SCT recognises
that throughout the country there are a variety of different approaches
being followed by authorities, which are now modernising their
political and decision making structures. These approaches are
all in different stages of development. As a consequence, there
is no common model for the role of Chief Finance Officer and how
financial governance is embossed in the culture and organisation
of an authority. What is vital, however, and should be common
is that the Chief Finance Officer enjoys sufficient status in
the organisation and is afforded the current statutory protection.
The SCT would argue that as a matter of principle
the individual circumstances of each local authority need to be
taken into account in such deliberations and that any attempt
to move towards rigid prescription would be a mistake. However,
the SCT is concerned that the importance of the Chief Finance
Officer and financial governance should not be overlooked in the
changing pattern of local authority development that is now taking
CIPFA is reviewing guidance, which they previously
issued in February 1999, on the Role of the Chief Finance Officer
in Local Government. The SCT has provided evidence to CIPFA to
assist in this key updating of principles. The SCT strongly supports
the work that CIPFA is now undertaking.
The separation of Executive and Scrutiny functions,
is a key part of the new arrangements. This could be a difficult
area for the Chief Finance Officer and financial governance if
key principles are not followed. Whereas it is most important
that the ability of the Scrutiny function to undertake independent
reviews of decisions must be respected, the need for sound and
impartial financial advice is common to Executive and Scrutiny
functions. The Society feels strongly that the Chief Finance Officer
should have equal access to both. With decision making moving
into portfolio holders, and the decision making process being
revitalised, practical areas emerge around ensuring that members
who are not immediately involved in this process are adequately
supplied with financial information. This could include members
of an opposition party if the authority has single party Executive.
In the latter circumstances, accountability and financial governance
mean that there should be adequate scrutiny of all such recommendations
before they move to the Council for decision making.
Implementing the modernisation agenda brings
with it a need to consider at some stage officer delegation levels.
A balance must be struck between decisions which should rightfully
be made by portfolio holders and those which might previously
have been made by members but which do not have the importance,
statutory or otherwise to justify a continuation of those previous
arrangements. Sound financial governance should be an important
consideration in any revision of delegation levels. This is another
illustration of the importance of understanding financial governance
to the day-to-day working of the local authority.
The Society is concerned about the potential
implications for the position of Chief Finance Officer and financial
governance if modernisation is undertaken without regard to a
framework of financial stewardship. The role of the Responsible
Finance Officer is defined by Section 151 of the Local Government
Act 1972 and there are specific responsibilities included in Section
114 of the 1988 Act along with particular responsibilities which
are included in the Accounts and Audit regulations.
CIPFA are separately submitting evidence to
the Select Committee. The SCT strongly urges the government to
ensure that the pillar stones that have successfully underpinned
financial administration and governance in local authorities should,
continue to be applied to the new political structures. Whilst
the decision making process is being revitalised, financial management
and governance principles should be common to both old and new