Council directors ‘confused about what a saving is’

Some top Bristol City Council bosses responsible for balancing the authority’s books are “confused about what a saving is”, a “shocking” report has found.

It concluded “a few service directors” who hold their department’s purse strings are unclear because “there is no approved council definition” of a budget cut.

An internal audit to check whether necessary reductions in spending set out in the council’s annual 2022/23 budget were being delivered has given only “limited assurance” – the second lowest of four bands of confidence that the system is working as it should.

The report, which also assessed how well savings were monitored and if the figures were accurate, said: “This led to uncertainty whether under-delivery of savings would put a balanced budget for 2022/23 at risk.

“A few service directors responsible for savings were confused about what a saving is as there is no approved council definition; time and effort may be wasted monitoring activities that do not result in savings.”

A council meeting heard that much of the confusion was because some officers were incorrectly including future savings, called “cost avoidance”, in their figures when they should only include “cashable savings”, which result in an immediate, direct reduction to a department’s budget.

City Hall management has accepted a series of recommendations to address six “key weaknesses” and taken action to improve the situation, including helping bosses understand the meaning of a “saving”.

Among the six key weaknesses was the fact seven of the 15 savings reviewed did not have a plan to deliver them, making it harder for the DE to monitor progress, and that the “delivery of the savings target for 2022/23 of £18million was in doubt”.

It said actions agreed by council management in response to the findings included developing a “savings framework that clearly defines what constitutes a cashable saving” and that “this will be communicated to all senior managers”.

The finance team would also “clearly set out” how savings should be recorded, while bosses would receive extra training on what they are accountable for, the report said.

Zoe Goodman, a Labour councillor Filwood, told the meeting: “I was quite shocked by some of the findings.

“Did it surprise you that they had not been picked up earlier by senior management, and are you assured they will be sorted adequately and in a reasonable timescale because if there is no definition of savings and senior management do not understand the savings then how are you going to achieve savings?”

Finance director Denise Murray replied that everything in the annual budget was referred to as a “saving” but that it included different types of ways to balance the books, such as “efficiencies” and generating income from external sources.

She said: “The fact colleagues are asking us to define and be very clear about ‘savings’, I found that surprising because I thought everyone understood the details and the context of what it is – that this is a combination of income generation, efficiencies etc – it’s the savings tracker that we approve at council.”

Murray said the lack of understanding included in adult social care where managers counted “cost avoidance” – reducing future costs rather than current outgoings – as a “saving”.

“We were very clear this is about the bottom-line reduction in budget,” she said.

“Cost avoidance has a benefit, it may reduce demand, but it isn’t part of the capital savings, so this can be fine-tuned to ensure that we are clear in terms of whether we are referring to cashable savings which reduce current levels of spend and whether or not cost avoidance should be counted.

“That’s the point that still needs to be clarified.

“In some areas, particularly the demand-led areas such as adult social care, we may find some confusion in how they do account for cost avoidance, but if you haven’t spent it, you haven’t saved it.

“So for me it’s very simple because I’m quite logical as I’m an accountant, but we have to find a different way to explain that so everybody can fully understand it.”

Adam Postans is a local democracy reporter for Bristol

Main photo: Alec French Architects

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