Released 11 February 2010
An Audit Commission online service that allows councils to check and compare their financial performance now includes data for England's 210 district councils.
The Local Government Ratios Tool has proved a popular ready reckoner so far with 150 county and single tier councils. The Commission introduced it alongside the national report Summing up: A review of financial management in local government 2005-2008 published last April.
The Commission's MD Audit, Martin Evans, explains:
'In business there is, of course, a focus on the bottom line. Private companies use profit margin as a quick indicator of their financial health. But in local government, where profit isn't the motive, we need to use other measures to check financial health.
'So, we've distilled the accounts of England's councils into five indicators based on financial ratios. We don’t claim they tell the whole story, but they do provide a reckoner that councils have already found accessible and helpful for their financial planning.'
The site has already drawn praise from local government finance directors in its first year, which is why the Commission decided to expand the service, being unveiled on 11 February. The online database has now more than doubled in size to include ratios for England's district councils.
Martin says:
'The Ratios Tool has already proved its worth with county and single-tier councils, so we decided to expand it to include districts. As smaller organisations their budgeting options can be even more acute, making tools to aid comparison and good financial planning all the more important.'
The tool calculates:
These calculations are not, in themselves, indicators of good or poor financial performance, as they reflect local challenges and decisions. But over time they do allow similar councils to make comparisons and identify common trends and movements.
The Local Government Ratios Tool can be found here (link in word document attached). It will expand to include district council data from Thursday 11 February 2010.
Notes to editors
From Councils that have used this tool already:
'I spent time reviewing the financial ratio's toolkit - this is also excellent – and very easy to use …. This area of work will be invaluable to local authorities - so a massive thank you from me.' Joan Grant, Senior Accountant, Central Finance Team, Lancashire County Council (6 August 2009).
'It is a shame that this tool is not available for district councils to use.' John Burke, Head of Finance & Procurement, Crawley Borough Council (21 July 2009).
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