Agenda item

To consider the External Auditor's two statutory recommendations and Annual Report for 2023-24.

Councillor Mike Hewitson proposed that the Council accept the recommendations in the report.  Councillor Liz Leyshon seconded this proposal.

The proposal was carried. 

RESOLVED

1.     To note the two Statutory Recommendations in the Auditor’s Report and

2.     Endorse the management responses and proposed actions set out in the report to Council.

The Chair of the Audit Committee, Councillor Mike Hewitson, introduced this report.

This report stated the External Auditor’s Annual Report for 2023/24 had been reported to the Audit Committee on 30 January 2025 (see Appendices 1 and 2 of the report).  It detailed the Auditors’ findings on arrangements in place at the Council to secure economy, efficiency, and effectiveness in its use of resources during 2023/24.

The Auditor’s report included two Statutory Recommendations in relation to serious concerns over the Council’s financial sustainability that had been issued to the Council, by its External Auditors Grant Thornton, exercising their powers under Schedule 7 of the Local Audit and Accountability Act 2014.

In accordance with the Act, a meeting of the Full Council was required within one month to consider the two statutory recommendations, to decide:

(a) whether the report required the authority to take any action or whether the recommendation was to be accepted and

(b) what, if any, action to take in response to the report or recommendation.

The Auditor in addition to the two Statutory Recommendations had also raised nine Key Recommendations and eight Improvement Recommendations addressing perceived weaknesses in the Council’s arrangements for financial sustainability, governance and securing economy, efficiency, and effectiveness.  The management response and planned actions would be overseen by the Audit Committee.

This report informed all Councillors of the background framework and the next steps to ensure that the external auditor’s statutory recommendations were addressed promptly and satisfactorily.

Statutory Recommendation 1 (SR1) The Council should develop detailed savings plans at pace to deliver the savings targets set out in the MTFS in order to reduce reliance on one-off resources and rebase the Council's budgets to a financially sustainable level.

Statutory Recommendation 2 (SR2) The Council should develop the overarching transformation business case and detailed business cases for individual workstreams that will deliver service transformation and contribute to delivering the Council's ambitious savings targets.  The funding required to deliver transformation, and the new target operating model, should be identified and a funding plan developed.  This should be undertaken at pace in order to deliver the savings required to balance the 2025/26 budget.

During the discussion the following points were raised:

·        Members of the Audit Committee said they accepted the findings by the Auditors.

·        There was some concern the Council had been slow to respond to the findings of the Auditors, and some felt there may have been a lack of humility shown in accepting them. 

·        Members said it was important to note the recent unusual circumstances for local councils including the LGR, COVID, and financial pressures.

·        Members noted the strength of the findings of the Auditors and how they should be taken very seriously. 

·        The Chair of Audit said the auditors would be giving careful consideration to the direction the Council was moving as it worked to improve.

·        The Director said it may be necessary for the Council to engage with external support in order to make good progress.

·        Members noted they would receive more reports as progress was made.

·        Members noted the capital receipts would be the main source of funding for the transformation. 

·        Members were uncertain how the restructure of the workforce would play out over the next few years.

·        There was concern about future budget gaps in the forthcoming years.  The Chair of the Audit Committee said, he could see no savings the Council could make which would be sufficient to close the future budget gap.  In his opinion the only option was to grow the Council Tax Base.  It was noted the Council Tax in Somerset was low in comparison with other counties.

·        With regard to delivery of savings, the Interim 151 Officer said savings were being constantly monitored.  Pressure was being put on all areas of the Council that had predicted overspends. 

·        Currently all of the Council savings were mitigated.

·        To bridge the budget gap the Council would need permission for a capitalisation directive and to increase the Council Tax.  News from the government approving such a capitalisation directive was expected by the end of the month. 

Members suggested the recommendations set out in the report be taken separately.

If they were to be taken together anyone voting against the recommendation would be noting the two Statutory Recommendations in the Auditor’s Report but not endorsing the management responses.

Councillor Mike Hewitson proposed that the Council accept the recommendations in the report.  Councillor Liz Leyshon seconded this proposal.

. 

Having been duly proposed and seconded, the Council Resolved:-

1.    To note the two Statutory Recommendations in the Auditor’s Report and

2.    Endorse the management responses and proposed actions set out in the report to Council.