Warning On Council Finance 'Jargon'
19 March 2015, 06:00
Jargon-filled reports from officials can impact on the ability of councillors to effectively scrutinise local government borrowing, a report has found.
The Accounts Commission has called for better training and support for elected officials responsible for examining local authority finances.
Councils currently have total debt of £14.8 billion, of which £12.1 billion (82%) is from borrowing, with just over half of local authorities increasing their borrowing levels over the last decade.
The report found that while councils are meeting professional requirements, they are not doing enough to analyse and report on the long-term implications of borrowing to fund capital expenditure such as new schools and roads.
Officials must present information more clearly and fully to councillors with a scrutiny role, the Accounts Commission said.
"Officers must use accessible language when reporting on borrowing and treasury management but many strategies and reports contain a lot of technical language,'' it said.
"This does not help councillors scrutinise effectively as any questions they ask are more likely about clarity rather than challenge.''
The report added: "Some councils are not presenting councillors with all the relevant information at one time to support borrowing decisions, for example in the treasury management strategy.
"This is important to ensure that decisions made are based on an assessment of all the relevant analysis and risks.''
Concerns were also raised about the ability of some elected officials to properly scrutinise council finances.
"We found councillors' experience varied, for example from councillors who had been accountants or finance directors to those with little or no previous finance experience,'' the report said.
"Some councillors told us that they are not always confident in challenging the strategy and framework for future decisions and asking questions about the content of reports.
"This is a complex and technical subject and officers need to provide wider training and support to councillors, and also provide clearer, more accessible reports.''
The report also found that financial reports were often difficult to locate on council websites.
It concluded: "This lack of clear and accessible information means that it is difficult for members of the public to understand how borrowing and treasury management activity is contributing to their council's priorities, and to understand what the performance of the council has been.''
Douglas Sinclair, chair of the Accounts Commission, said: "This is a highly complex technical area. Councillors don't need to know every detail but they do need to know enough to ask the right questions.
"This is a critical part of council business which requires close and effective scrutiny, particularly in times like this when budgets are so tight.
"We hope this report will help councillors and officers make improvements through clearer information and wider analysis of options so that they can be confident that their borrowing policies deliver best value in the longer term.''