A step into the modern financial world

Local councils want to take the new localism agenda forward in their communities with taking more control over public services or having a greater say in the way they are run in their area but this is being hampered with arcane rules from the 19th century Act still in force. It is strange to think that all 9,000 local (parish and town) councils have to adhere to financial payment rules set out in the 1894 Local Government Act. Oddly at present all local councils must adhere to the Act, which requires the signature of two members of the council on every payment or cheque. Hardly a fine example of modern 21st century local government. The National Association of Local Councils (NALC) has been waging a decade long campaign with successive governments to change this historic oddity. We want local councils to be able to do electronic banking and modernise how they make payments like in other parts of the public sector. The 1972 landmark Local Government Act allowed other tiers of local government to make their own arrangements for the proper administration of their financial affairs. Now it would appear that this Coalition Government is finally going to do something about it. The Government has recently issued a consultation on a Legislative Reform Order, which could make the changes that NALC has been after for a while. If local councils are to be at the heart of localism and new ways of connecting communities to the levers of power then surely it makes sense that they should be freed of outdated and prehistoric legislation, which prevents them from working in a more efficient and effective manner. It must be remembered that local councils work towards improving community well being and providing services at a local level. Their activities fall into three main categories: representing the local community; delivering services to meet local needs; striving to improve quality of life and community well being. The use of cheques is falling fast. They made up just 3% of UK payments in 2010 - a 59% decline since the start of the century. Also the 'two signatures' rule also adds to the costs of businesses, or other public bodies, forced to receive cheques from the councils. So definitely time for a change. But this should not be dictated from Westminster, as there should be a flexible approach taken to this, which allows local councils to choose the best payment methods that suit them. Many local councils are likely to continue with the tried and tested process of two signatures, but the majority will move to new electronic systems. Proper safeguards will be necessary and normal banking arrangements now allow for remote approval of payments. Local councils will hopefully shortly be in a position to work towards the abolition of cheques for all payments. This reform has been on the agenda for many years and finally the Government are listening to us on this. We expect local councils to express their strong support for these proposals. This is an important step forward in reforming the many outdated rules, which prevent local councils operating in modern and efficient ways. For more information on the payments consultation please visit: www.communities.gov.uk/publications/localgovernment/parishcouncilspayments. The closing date for responses is Tuesday 11th September.