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Governmental financial resilience under austerity: English local authorities Logo cima

  Ileana Steccolini, Carmela Barbera, Martin Jones |   Free |   CIMA |   Jan 2016 |   Thought leadership

The increased uncertainty, volatility and complexity arising from the economic crisis and the context of austerity require governments to put greater emphasis on flexibility, adaptability and a long-term perspective in their financial management.

Through a multiple case study analysis of four local authorities, this report adopts the conceptual lens of financial resilience to explore the main shocks undergone by local authorities over the last ten years and the related responses and capacities, with a specific focus on the recent 2008 crisis and current context of austerity. The analysis suggests relevant implications for policy makers and managers.

This project explores and conceptualises financial resilience by looking at:

  • How English local authorities react to, anticipate and absorb shocks that affect their financial condition and whether different approaches emerge.
  • How reactions and capacities for response have evolved over time, particularly in the aftermath of the global financial crisis.
  • The lessons to be learnt for ensuring that the financial resilience of local government is seen in a longer-term perspective.
Topics covered:
  • Management accounting: Business: Strategy, Advanced
  • Management accounting: Business: Macroeconomic analysis, Intermediate
  • Management accounting: Technical: Business planning: Planning, forecasting & budgeting, Advanced

3 Comments/Reflections

Kenneth Jones

Kenneth Jones Apr 2018

Brief but interesting look at the growing importance of resilience in English local authorities.

The article explores different strategies to dealing with external changes. The growing importance of risk management was interesting.

Although a different sector to my own, the concept of financial resilience is important and one that I will explore further for my own organisation.
Neraniki Joise Raghavendra Vidyaranya Girish Kumar

Neraniki Joise Raghavendra Vidyaranya Girish Kumar Apr 2017

Good. Given some insight.

Highlights are captured below.

Financial resilience approaches have gained increased momentum in the aftermath of the 2008 crisis
Financial resilience generally requires a combination of capacities and reactions, i.e. management of slack resources, income generation, learning how to see things coming, developing anticipatory capacity, organisational restructuring and development of new skills, ensuring continuity in leadership, adopting a holistic view and rethinking services
Two main approaches to financial resilience emerge: local self-sufficiency and internal financial management.

Prior to 2008, the main shocks identified by respondents related to:
• Specific policy issues (e.g. waste disposal due to increases in landfill tax)
• Problems with the management of specific budgets (e.g. Adult Services and Children’s Services)
• One-off events (e.g. uninsured losses arising from claims on the council)
• The requirement to achieve Gershon3 efficiency savings.

1. Managing slack resources: financial flexibility
2. Income generation
3. Learning how to “see things coming”
4. Making an early start: anticipatory capacity
5. Organisational restructuring and developing new skills within the organisation
6. The role of political leadership and continuity
7. Adopting a holistic view
8. Re-thinking services

Conclusion :
• Consolidating the link between risk management, anticipatory capacities and reactions
• Strengthening financial self-sufficiency
• Ensuring a stronger integration of strategic, operational and financial management
• Improving accountability and decision making in partnerships, joining up and multi-agency working
• Supporting strategic decision making geared towards ensuring the government’s role in economic growth, as well as income generation.
Susan Swift

Susan Swift Apr 2016

Have more of an idea re local govt response to 2010 spending cuts and forwards from there.Resilience and forward capacity. Holistic view, multi agency joined up thinking (also re strategy, operational and financial management) though also strengthened self sufficiency and some tough adjustments re what services are still supported.Also future income generation, use slack resources and try to support eco growth.