CIPFA review recommends governance improvements at borough council

Rushmoor identified its financial issues ahead of setting its budget for 2024-25.

It had entered into discussions with central government about receiving exceptional financial support (EFS) in late 2023, but its request for EFS was refused.

This led the local authority to develop a financial resilience plan, which included a scheme to sell £40m worth of council assets.

The plan also involves a series of governance changes that include revising the council’s timetable for financial reporting, maintaining and improving suitable expenditure controls, and developing financial skills within the council.

Alongside adoption of the plan, which took place in February 2024, Rushmoor commissioned CIPFA to carry out a review of the council's financial resilience and the plan itself.

Councillors considered the CIPFA report at a cabinet meeting late last month (23 July) and adopted all of the report's recommendations.

In its report, the public financial management body welcomed the plan to dispose of £40m worth of council assets and the implementation of savings targets.

Alongside this, it called for the council to make changes to its senior officer structure.

It said: "In Rushmoor, the S.151 Officer reports to the Monitoring Officer/Deputy CEO.

"We recognise the S.151 officer is a member of the Executive Leadership Team and involved in all key organisational decision making.

"However, The imminent 'Code of Practice on Good Governance for Local Authority Statutory Officers' which has been consulted on by LLG, CIPFA and SOLACE will state 'The Chief Finance Officer and Monitoring Officer should have a clear and direct relationship to the Head of Paid Service (Chief Executive), normally through line management or other equivalent arrangement'.

“In Rushmoor, the S.151 Officer reports to the Monitoring Officer/Deputy CEO so is not a direct report to the CEO. In our opinion, good practice suggests the S.151 Officer should have a status equivalent to the Monitoring Officer and be a direct report to the CEO.”

Elsewhere, the report highlighted problems with financial management.

It said: "The Council needs to reassert the importance and centrality of finance to the Council, addressing issues in relation to financial capacity and competencies and the robustness of financial management."

CIPFA said there is a historic lack of clarity and consistency in reporting, suggesting a lack of financial management capacity and competency.

It also highlighted issues with churn in the section 151 officer role, which has seen four different people take on the position in recent years.

The report noted that the council has had a "significant" focus on major regeneration projects, which has "led to the high levels of debt and the current challenge to financial sustainability".

It added: "In our interviews, participants identified that the Council, has accepted a high level of risk in order to progress its regeneration ambitions, acting in an 'entrepreneurial' manner.

"This has contributed to a significant debt position which, alongside the ongoing imbalance between cost of services and income, is now impacting on the council's financial sustainability.

"Given the urgency of the situation, the Council needs to assure itself that the governance and delivery arrangements for the Financial Resilience Plan are supported by clarity of priorities, focus and direction, which leaves no room for competing agendas or diversion from the essential decisions and actions the Council needs to take."

CIPFA made a series of recommendations, including recommendations relating to the council's governance arrangements set out in its financial resilience plan.

CIPFA said: "It is important to have the right focus and leadership in meeting the challenge to secure and maintain financial sustainability.

"It is essential that the governance arrangements put in place to implement the Financial Resilience Plan reflect this need for focus and leadership together with a sense of urgency."

The leader of Rushmoor Borough Council, Cllr Gareth Williams, said: "I welcome the CIPFA report, which confirms our earlier concerns about the council's finances.

"Since taking control we have seen that the position is, if anything, worse than we had thought.

"As a new administration, we are uniquely placed to take a fresh look at the budgets and the council's priorities, and to get the council back onto a sound and affordable footing."

Adam Carey