Organisational and structural risks among recurring themes at councils receiving Exceptional Financial Support: CIPFA

The findings were outlined in a report on the accountancy body's financial assurance reviews carried out at 12 out of the 19 councils currently in receipt of Exceptional Financial Support (EFS) from central government for the 2024/25 financial year.

CIPFA's report details the common issues it found across the 12 local authorities, with chapters dedicated to the unique circumstances affecting each council.

"None of the councils reviewed faced exactly the same challenges, but for most, the majority of risks were organisational and structural," the report added.

Across all themes, planning and strategy, culture, capacity, skills and knowledge, internal audit, commercial ventures, assets, savings delivery and reserves were the most significant issues affecting councils

Eighty-three per cent of the councils had major planning and strategy issues, often the result of “inadequate” transformation programmes, the report added.

While 67% of the councils suffered from a lack of capacity, skills and knowledge from employees and or members.

In half of the councils, internal audit was also a substantial area of concern, resulting in recommendations for three of the councils to increase independent audit committee membership or the appointment of an independent chair for three.

The report also noted that 25% of the councils had undergone local government reorganisation in the last five years.

Children's services and adult social care were described as a "near-universal" demand pressure for councils in the report, with just one of the 12 councils (Eastbourne) being unaffected.

Commenting on the impacts of the Government's ongoing reorganisation programme, the report said: "While reorganisation may bring longer-term benefits, the process of reorganisation is costly and logistically intensive and it will also involve some councils already receiving EFS (eg Woking, Thurrock and Medway), further straining the budgets of those under severe financial pressure."

In total, EFS allocated in the 2024/25 financial year was worth £1.5bn, with Birmingham City Council (£685m) and City of Bradford Council (£140m) receiving the most financial support.

The figures also show that almost 10% of all councils (30 of 317) are now in receipt of EFS.

CIPFA Managing Consultant, Simon Allsop, said: "We are committed to supporting councils and other public bodies in developing practical approaches to deal with uncertainty and the financial and resource pressures they are facing. At a time of unparallel competing demands on the sector and its professionals, our assurance reviews highlight approaches that build resilience and help address risks."

CIPFA Senior Policy Manager Joanne Pitt added: "The public sector has always valued shared learning, and this report builds on that ethos by highlighting the lessons from these reviews. While every organisation is unique, there are clear common themes, and capturing these is essential for future planning across the sector."

Adam Carey