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Has the County Council lost control of it's Accounts Department?

The issue

Herts County Council is only meeting the minimum requirements for financial management and providing value for money. This actually represents a decrease in performance in recent years. 

The facts

Each year, the Audit Commission runs a Comprehensive Performance Assessment (CPA) of Herts County Council to judge its performance in providing key services. 

The most recent report in 2008 found the council's use of resources wanting, scoring overall financial management and value for money 2 out of 4 - only meeting the minimum requirements. 

The council's financial reporting was given a score of 1 out of 4, the lowest possible, meaning inadequate performance below the minimum requirements.  

According to the Commission: "the Council has not been able to demonstrate that it clearly promotes external accountability in respect of its financial and accounting information." 

To put this into perspective, East Herts District Council performs well financially, scoring 4 out of 4 for financial reporting and 3 out of 4 overall. Neighbouring Essex County Council scores 3 out of 4 and Cambridgeshire 4 out of 4. 

In previous years the council has received good financial performance ratings, so the 2008 findings represent a significant decline in the quality of service. 

How does the Council spend its budget?

Adult Social Care Services - £235.5m

Central Services - £24.7m

Children's and Education Services - £208.8m

Court Services - £1.1m

Cultural, Environmental and Planning Services - £62.8m

Fire Service - £45.3m

Highways, Roads and Transport Services - £71.1m

Housing Services - £0.1m

Net cost of services - £649.4m

Other operating income and expenditure - £34.3m 

HCC's Icelandic banking woes

A PriceWaterHouseCooper's report has criticised the decision making process that led to the Council investing £28m in Icelandic banks shortly before they crashed last year. 

Because HCC failed to carry out the correct rating checks, banks like Landsbanski were seen as safe and profitable investments for public money. This is despite negative credit ratings for Landsbanski by Moody's Investment Services, one of the world's most respected credit rating firms. 

Even once Landsbanski was recognised as a risky investment, HCC continued to make multimillion pound deposits with one of its subsidiaries, the Heritable Bank. 

On 28 occasions, investments were only reviewed by one person and not by two as procedures required. The PWC report states that had correct procedures been followed, the danger would have been recognised before deposits were made. 

To date none of the money, which amounts to approx 8% of the council's annual budget, has been retrieved. 

Value for money?

There has been much recent interest in the news over how the County Council uses its funds. The £5,000 a year cost of a scheme that teaches children how to ride a bus reached the national press, and the Council is likely to have to pay up an additional £7.5 billion for infrastructure on new homes being built as part of the Government's East of England Plan. 

Have your say: What do you think about all this? Do you think your elected Councillors have been doing their job properly?

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