CIPFA to issue new guidance on council-owned companies

The Chartered Institute of Public Finance and Accountancy (CIPFA) will shortly issue new guidance to councils on governance arrangements for local authority trading companies (LATCs).

The development of the guidance follows recent revelations in Croydon and Nottingham around growing recognition that the lack of good governance and effective financial management can cause serious damage to the resilience of public services.

The focus from the guidance will be on reducing risk and building stronger assurance processes, while supporting chief finance officers to improve good financial management consistent with CIPFA’s Financial Management Code.

Rob Whiteman, CIPFA CEO, said: “Since 2011, LATCs have started to deliver a number of services across the nation. Despite this, recent public interest reports show there's a lack of clear guidance to aid such arrangements and a insufficient data on the possible risk to the financial resilience from the sector.

“Whilst not a proper code of practice, this guidance will develop the best examples the sector provides to build up greater rely upon public financial management and reduce the financial and reputational risks for councils who own companies.”

Luke Hall, Minister for Regional Growth and native Government, said: “We have recently seen residents in Croydon and Nottingham being severely disappointed by failed council commercial ventures. I therefore welcome this guidance from CIPFA that will help all councils in their duty to manage taxpayers’ money responsibly regarding local authority trading companies.”

The guidance is set to be released within the autumn.