If you ask most councillors what aspect of their roles they dislike the most, it’s a fair bet they will say the budget setting process.
One reason is that even the smaller councils have a huge number of budget lines – that is allocations of monies to particular projects, statutory responsibilities and at times their own priorities. The sheer complexity of the budget-setting process is daunting and can expose differences between the elected councillors and their professional officers. The arguments become even more complex when differing political party perspectives are introduced into the mix. This is especially true for councils that are ‘hung’, i.e, they have small or no majorities and this therefore becomes a battle ground – one where the responsible financial officers of the council can either make or break their reputations.
Each budget, when set, becomes the template for the next financial year and has status in law. It is the legal duty of the council to set a lawful budget, in that they cannot spend more then the available resources, however, they also have ensure that they have sufficient resources in reserve to meet exceptional circumstances and they have to offer a level of assurance that the budget is ‘future proofed’ over forthcoming years.
Assurance that the budget is workable, ethical and in line with legislation is in part provided by the requirement that a senior finance officer of the council has ‘Section 151’ powers. This is a legal duty to call a stop to any action that could bring the council into circumstances of extreme financial difficulty. In exceptional cases, under the Local Government Act (?) all council business can then be suspended and central government can appoint an external person to run the council - and all the elected members are ‘stood down’. This is an extreme and rarely used power but it helps demonstrate the high level of anxiety that many councils feel around the management of the overall budget, although the overwhelming majority undertake this activity with very high levels of skill and professionalism.