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Report to: |
Lead Member for Resources and Climate Change |
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Date of meeting: |
10 June 2025 |
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By: |
Chief Finance Officer |
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Title: |
CIPFA: Financial Assurance and Governance Review |
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Purpose: |
To seek the Lead Member’s approval to commission CIPFA to undertake a Financial Assurance and Governance Review |
RECOMMENDATION:
Lead Member for Resources and Climate Change is recommended to approve the commissioning of CIPFA to undertake a Financial Assurance and Governance Review.
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1.1 The Reconciling Policy, Performance and Resources (RPPR) reports to Cabinet and Full Council in January and February 2025, set out the financial challenges that the Council faces, and whilst a balanced budget was set for 2025/26, it was highlighted that unless there was a significant increase in government funding it would be likely that the Council would need to approach the Ministry of Housing, Communities and Local Government (MHCLG) to explore options for Exceptional Financial Support (EFS).
1.2 MHCLG, when approving EFS to Councils, require the Chartered Institute of Public Finance and Accountancy (CIPFA) to undertake a Financial Assurance and Governance Review. Recently published reviews can be found on the link: Exceptional Financial Support for local authorities for 2024-25 - GOV.UK
2.1 The annual State of the County report will be considered by Cabinet on 24 June 2025, which will set the scene for the RPPR process that will lead to the 2026/27 budget being presented to Full Council on 10 February 2026.
2.2 When the 2025/26 budget was set in February 2025, the Medium-Term Financial Plan showed a deficit for 2026/27 of £37.365m. The financial planning environment is challenging given a number of significant unknowns at a national level, as well as local service pressures. The Comprehensive Spending Review, the outcome of the formula funding consultation and impact of the business rates reset are all unknown, plus the Council will not receive the expected multi-year Local Government Funding Settlement until November 2025, at the earliest. With these uncertainties it is important that all options that may be available are explored, to enable the legally required balanced budget for 2026/27 (and 2027/28) to be set.
2.3 If EFS is an option that the Council needs to access in order to set a balanced budget for 2026/27, CIPFA will need to be engaged to provide the necessary assurance to MHCLG. CIPFA have been approached to undertake their assurance review early, to provide the Council with a report that will support the work that the Council may need to undertake with MHCLG. If EFS proves not to be required, or an option, the CIPFA review will provide external assurance as to the actions the Council is taking to address the financial challenges the Council faces.
2.4 The proposed review is set out in Appendix 1 and will cover:
· Financial Management/Sustainability;
· Commercial Assets/Debt;
· Capital Programme/Companies;
· Governance; and
· Children’s and Adult’s Services.
2.5 The review, which will take 6 weeks, will involve interviews with Members and officers, a review of documentation and some workshops, that will provide a report and improvement plan. The report will inform the RPPR process for 2026/27 and provide an early view as to how EFS can be approached and achieved.
2.6 The review will cost £40,000.
3.1 If the Council is to explore Exceptional Financial Support with MHCLG, it will be required to undertake a CIPFA Financial Assurance and Governance Review. The Lead Member for Resources and Climate Change is recommended to agree that CIPFA is commissioned to undertake the review, with the CIPFA report forming part of the RPPR process in setting the budget for 2026/27.
IAN GUTSELL
Chief Finance Officer
Contact Officer: Ian Gutsell, Chief Finance Officer
Tel. No: 01273 481399
Email: ian.gutsell@eastsussex.gov.uk
Local Member(s): All
Background Documents
None