Agenda item

To receive a presentation

The Audit Committee noted the Grant Thornton presentation - Preventing Failure in Local Government – lessons learned.

The Chair welcomed the Director and PSA Head of Audit Quality - Regulation, Audit Grant Thornton UK LLP, Barrie Morris, and the Director of Local Government Value for Money, Audit Grant Thornton UK LLP, Guy Clifton, for this item.

The Committee received a presentation, which provided a summary of findings from the recently published Grant Thorton’s ‘Preventing Failure in Local Government’ report, drawing on the research on Government, external audit, and other interventions where there has been a financial or governance failure at a Local Authority.

Guy Clifton highlighted the following:

•        That Local Authority significant failures remain rare but not as rare as they used to be.

•        That the research gone into the report relates to examples of Government intervention auditors' use of these statutory powers and the issuing of S114 or S5 notices to relevant statutory officers;

•        The report examines the themes that relate to these issues,  the causes, and the good practices and the opportunities for preventing future failures and other local authorities.

•        That the act of issuing a S114 notice or S5 notice may not in itself represent failure.

•        Summarised key findings, including the causal factors of failure, grouped into themes Structures, Systems and Behaviours and the good practice of function and roles within these themes.

•        That the themes can play their part, not necessarily in every single local authority failure, but they often play a part in a number of LA failures.

•        In summary, it is believed that most Councils are still well run, and most Councils have avoided significant failures, but there are increasing sector challenges both internally and externally that need to be managed.

•        The 2nd report  due in January 2024 and will provide a greater level of detail for Local Government regarding the actions they can case studies as well.

The Committee asked a number of questions and made a number of comments, which were responded to at the meeting, as follows:

•        The Council tax based on property value is 1991 and the unsustainable way of funding a Council against the demography of a Council, and the expectation and the factors out of the control of for Somerset Council, including Council Tax, Business rates used for to contribute to fund social care the need for a form of the finance system the whole system the report makes it clear the whole system needs reform, the impact of inflationary demands.

•        The local and national contributors to the financial situation and the need for Local Government funding reform.

•        Case study considerations for Grant Thornton to undertake, including bidding for multiple funding pots and Local Government funding reform.

•        The management of Councils within the criteria and good practice within the report, past failures of Councils and the mitigating themes, the issuing of S114 notices retrospectively and looking forward considering the national challenges.

•        Transition issues including interim posts and associated organisational challenges.

The Chair thanked Barrie Morris and Guy Clifton for the presentation, and the Audit Committee noted the Grant Thornton presentation - Preventing Failure in Local Government – lessons learned.