Exclusive: Combined authority focus to upcoming finance reforms

Public accountants will shortly launch a formal consultation on reforms to the Prudential Code for Capital Finance in Local Authorities with a particular focus on establishing new guidance for combined authorities, Transport Network understands.

Local authorities are required to ‘have regard’ to the key document when developing their capital investment plans for infrastructure.

Senior figures in the sector suggested that there is an opportunity to address some of the issues around the new local government landscape, which has established bespoke financial devolution deals for different councils across the country.

Alison Scott, who is the head of the standards and financial reporting faculty at the Chartered Institute of Public Finance and Accountancy (CIPFA), said the formal consultation could be released within weeks. This follows a call for responses earlier this year as part of the review.

She told Transport Network: ‘We are shortly going to consult on our prudential code for capital finance. One of the big changes for us is thinking about combined authorities, which invest in large infrastructure.

‘The code is based on high level principles. It will look at improving the guidance for combined authorities as to how they apply the principles. [Different devolution arrangements] are quite a challenge for the sector at large. We are moving to a future where there is no “normal”. It’s different everywhere. The London model has been in place for some time and is well proven however.’

President of ADEPT, Simon Neilson, told Transport Network: ‘The more permissive [the code is] the better because we don’t want to constrain the ability to spend money on local priorities, but it should not be a free for all. We have governance arrangements in local government, so let’s use them.

‘We still have competitive bidding, which diverts funding from schemes, and often councils rely on a funding cocktail, if any part of the funding falls through, the whole scheme can collapse.

‘We need to think in a more collective way; so rather than have say seven pots of funding there should be only one in local control. That was the whole idea of the Local Growth Fund as Michael Heseltine suggested it. That should now be trialled with combined authorities.

‘There is a danger that devolution just becomes local administration of central funding streams.’

Chair of the Communities and Local Government Select Committee, Clive Betts, said that it was ‘absolutely right’ that CIPFA was looking into this and suggested that new arrangements were necessary for the scrutiny of combined authorities.

‘It is essential that lines of clear accountability are established right from the start. There is a need for clarity and transparency. If you have lots of bodies providing oversight you can end up with no one providing oversight,’ he said.

Mr Betts also suggested that while different combined authorities have different funding packages under devolution deals, there could still be a universal set of guidelines on how these deals work in practice.