Somerset Council: External assurance review, 2024-25

Press forward with the Transformation Programme to deliver the savings identified in the unitarisation business case.

Obtain an opinion from the newly arrived Interim S151 Officer on the content of the Headline Review of the MTFP which has been handed over to the council by the retiring Director of Finance.

Leadership Team consideration of the draft plan (i.e., the Headline Review) and (a) adopt it for implementation; or (b) otherwise implement as much of the plan as can reasonably be accomplished by commencement of financial year 2025/26; or (c) put forward a formal application to MHCLG for EFS.

A key part of undertaking this work will be to minimise the risk that remaining earmarked and unearmarked reserves fall to a critical level i.e., less than £30 – 35m over the course of the MTFP in its final and agreed form.

Take urgent steps following the review at recommendation (3) to ensure that all necessary actions are underway to maximise the prospects of bringing forward proposals for balancing the 2025/26 budget.

Take steps to monitor and review savings already included in preceding budgets. This is likely to mean assigning specific resource working to the proposed Director of Transformation and/or the Director of Finance to assure this position. The council should also commence a general programme of financial training for managers.

Delivery of savings should be reported monthly to the Leadership Team and the Executive as part of the regular budget monitoring reports. This needs to be done in the context of a more sophisticated traffic light system to track progress with savings.

Ensure that budget monitoring reports contain financial information about each Directorate to fully explain the reasons for adverse variances and to identify mitigating actions that will be taken by individual or groups of Directorates to manage the position.

Ensure the monitoring of the Capital Programme is improved alongside improvements to the revenue budget monitoring reports that are used for Leadership Team and the Executive.

Ensure that financial monitoring information should is reported routinely to the Scrutiny function and that Scrutiny Committees are invited to agree recommendations to the Executive where progress is, in the opinion of the Scrutiny function, not assured,

Begin forecasting the balance sheet as part of financial monitoring processes. This should be undertaken on a quarterly basis alongside a (monthly) report which reports on budget monitoring and progress in the delivery of savings.

Develop forecasting to manage the position where earmarked and unearmarked reserves are in danger of sitting below 5% of Net Revenue Expenditure (NRE).

Develop a sufficient understanding of corporate debt to provide assurance that the council's portfolio of debt can be successfully collected. An urgent review informed by specialists external to the council is required at pace.

Centralise debt collection generally within the council, including this as part of the Transformation Programme for subsequent implementation.

Understand the relationship between failure to optimise the collection of debt and the risk of drawdown of reserves that are becoming a scarce resource.

Put in place proposals to rebuild reserves as part of the MTFP and the emergent proposals to balance the budget in 2025/26.

Take steps to ensure that the monitoring of the council's Capital Programme is improved in terms of detail, forecasting quality, frequency, reporting lines and format. This is likely to be best achieved by creating a Project Management community within the council that can be led through these challenging activities.

Consider the prospect of de-programming lower priority schemes from the Capital Programme even if, in some cases, this may imply turning down the offer of Government grants in cases where there is a need for match funding that introduces additional pressure in the revenue budget.

Continue policy to dis-invest from certain investments undertaken by the legacy district councils and establish benchmarks to govern such dis-investment in acknowledgement that management of these investments is not the council's core function.

Continue to review the business case for holding commercial assets and items of property generally on an ongoing basis.

Direct capital receipts from asset sales towards the repayment of long-term debt unless these have been incorporated in proposals related to Flexible Use of Capital Receipts.

Retain the services of an independent specialist consultant to provide project assurance on the detail of the council's Treasury Management operations.

Ensure that all recommendations from the review undertaken in December 2023 by specialist advisers on the council's balance sheet and Minimum Revenue Provision (MRP) Policy have been fully implemented.

Press forward with the Transformation Programme with all dispatch including the reduction in headcount which lies at the heart of financial recovery for the council.

Consider what steps can be taken without delaying or deferring progress to ensure that the workforce feels supported to a greater extent on the transformational journey, which includes very significant reductions to the council's staffing establishment. In doing so, the council needs to be mindful of the results of the recent staff survey.

Proceed at pace to gather all projects that have been undertaken to release financial savings and all transformation projects with the directorates into the overarching Transformation Programme.

Appoint a Director of Transformation to help the council lead and shape the journey to secure cost reductions and provide a focus through a Transformation Board for monitoring, review and strategic decision making.

Review the membership of the current Corporate Transformation Board with the aim of widening membership and experience so that the Board is not simply another version of the Leadership Team meetings which happen elsewhere in the practice of governance.

Develop, resource and set in place a project to exploit the capabilities of the council's new ERP system, Microsoft Dynamics. In doing so, the council should reach out to other councils which have experience of using this product and make use of external expertise, as required.

Consider deferral of reducing the size of the staffing establishment in Finance Directorate given the character of the present 'Financial Emergency'.

Ensure that the S151 Officer's post remains at Executive Director level in the forthcoming re-structure in preference to being demoted to Service Director level – a third-tier post.

Ensure that the Monitoring Officer's post remains at Service Director level (as a minimum) in the forthcoming re-structure in preference to being demoted to Head of Service level – a fourth-tier post.

Ensure that the Governance Review undertaken in early 2024 by the Governance Team is disseminated to members and officers to increase knowledge and awareness.

Ensure that the Members' Resource area of the corporate website is further drawn to members' attention.

Review the volume of material presented to meetings of the Audit Committee, seeking reductions to enable the Committee to better focus on key issues and controls without impairing the breadth and depth of subjects brought before the Committee.

Consider making a failure to comply with budgetary constraints a disciplinary matter within appropriate council contracts of employment.

Move quickly towards a position where a single set of terms and conditions of employment is used for all staff.

Consider taking additional steps to ensure that the workforce feels supported in undertaking the council's transformation journey.

Ensure that the new risk management system is installed successfully and that a plan is in place to exploit it fully.

Ensure that the new risk management system is used dynamically to identify, manage and mitigate risks fully.

Ensure that financial targets will be met and take urgent action in 2024/25 if this is not the emergent trend in the forecasting process within the Directorate, noting that any overspend on the scale of 2023/24 is likely to oblige the S151 Officer to engage with MHCLG on potential further support in 25/26.

Ensure any underspend in Adult Social Care is allocated to the General Reserve at year-end.

Include the transformational and savings projects variously operating in the council in the overall Transformation Programme for purposes of visibility, transparency, monitoring and strategic direction.

Ensure that financial targets will be met and take urgent action if this is not the emergent trend in the forecasting process within the Directorate.

Ensure that transformational approaches are developing in Children's Services and take urgent steps to obtain suitable external advice on framing such approaches if this is not the case.

Ensure that regular performance reports describing performance by Directorates in complying in with (a) corporate policy; and (b) the latest statutory changes are presented by the Head of Procurement to the Leadership Team and the Executive.