Agenda item

Officers presented an update on the Governance Review Improvement Plan (GRIP), which brought together strands of governance and financial improvement arising from internal and external audit recommendations.

Workstream 1 – Financial Governance

A wide range of actions and initiatives had commenced since the previous meeting, and all Section 24 recommendations were now incorporated. New spend control measures were being introduced, and the Council was undertaking a robust process for setting the 2026/27 budget, including a thorough review of proposals for savings and growth. Officers had conducted extensive reviews of the financial position, savings, growth models, and key accounting procedures. Although the financial position had deteriorated, officers reported improved clarity regarding the Council’s current situation and future direction. Discussions with MHCLG regarding Exceptional Financial Support (EFS) were ongoing. Additional work had been undertaken on cash flow modelling, capital programme review, and improvements to the audit position for 2024/25. Progress had also been made on reducing the in-year Dedicated Schools Grant (DSG) deficit.

Workstream 2 – Directorate Governance

Progress in directorate governance during the second and third quarters had included the rollout of an aligned business and financial planning template across the organisation, with all plans approved by Corporate Directors. Internal audit exercises were underway to review these plans. A corporate tracker had been established to record business decisions and governance arrangements. The Corporate Management Team reviewed workforce, performance, finance, risk management, and projects monthly, with similar processes mirrored at other management levels. Senior managers participated in regular meetings and governance training, including a masterclass session. The governance structure had been refined to reflect best practice and internal and external audit recommendations, with boards such as the Capital Board and Workforce Improvement Group reporting to the Corporate Management Team and the Chief Executive.

Workstream 3 – Constitutional Governance

Members were updated on the independent review of the Council’s Constitution and wider governance, commissioned from Lawyers in Local Government (LLG). An initial draft report had been received and was under review, with a meeting scheduled to discuss its constructive suggestions. Any proposed constitutional changes would be brought to Council for decision, and Members would be kept informed.

Members asked about optimism bias in budget setting. Officers explained that multiple levels of review had been implemented to ensure proposals were substantiated, with robust templates and iterative challenge processes involving both officers and Cabinet Members. Monthly monitoring via an app had been established, requiring senior managers to report on savings progress, with sign-off and challenge at Director and management team levels. Growth models were also being reviewed. This ensured a more robust process than had been in place previously.

All working papers had been documented to provide evidence of delivery and address risks or delays. Officers acknowledged that while predictions may not always be accurate, the process for making them was now much more robust than in previous years.

Members asked about clarity on the financial position and when there would be an optimum level of clarity. Officers noted that significant work had been undertaken to improve clarity, with ongoing monitoring and reporting. While risks and opportunities remained, the Council was now better positioned to avoid major financial swings and to address weaknesses.

Members asked about issues identified by the LGA Challenge Session.Officers noted that the session included representation from the LGA and had focused on ensuring senior management understood the consequences of the Council’s financial position and the conditions attached to EFS. The session was described as a round-table discussion rather than a formal challenge, aimed at clarifying support options and lessons learned.

Members asked for the definition of essential spend. Officers clarified that essential spend was distinct from statutory spend. While some expenditures were legally required such as when committed to contracts, others were determined by Council policy. Spend control measures aimed to honour contractual and statutory obligations, with other elements subject to policy decisions.

Members queried if the Council’s high ratings in children’s services, adult services and housing provision would influence EFS negotiations. Officers responded that EFS would ensure that there was the necessary revenue to cover expenditure this financial year. While the high ratings were positive, discussions with MHCLG remained focused on financial governance and management. Assurance would be required regarding the Council’s direction and robustness in addressing financial challenges.

Members asked about contingency for slippage in savings. Officers confirmed that the latest monitoring report had released in full the available contingency for all potential risks the Council could face. Future budgets would re-establish a contingency to mitigate against risks and unforeseen issues.

When asked about overuse of the term ‘robust’, officers clarified that there was a requirement called the robustness of estimates which required use of the term robust.

RESOLVED: That the update to the Governance Review Improvement Plan was noted and the Committee sought clarifications and assurances