Devon County Council is expected to undertake a year-long “root and branch” review after admitting “serious, material, well-evidenced” failures in its corporate governance.
A report by its legal and finance directors describes the council’s position as “very challenging” and identifies “a number of fundamental issues” prompting an “urgent need” for a high-priority review.
It cites failing Special Educational Needs and Disabilities (SEND) provision and children’s services as major factors while warning that its financial viability is at risk and admitting that its stakeholders lack confidence in its ability to address these challenges.
Clouds gather over County Hall
The report follows criticism of the county council’s corporate governance by the children’s minister and the imposition of an independent commissioner to hold the council to account over its failure to improve its children’s services, which have been regularly rated “inadequate” by Ofsted over the past decade.
In December the county council was told that its children’s services were considered the “third or fourth worst in the country” and would be taken into special measures and taken over by an independent trust if improvements were not made.
It also follows “relentless institutional failings” in SEND children’s services provision over the past five years which led to a major protest at County Hall in February.
SEND protest at County Hall
The report also warns that the county council faces a “material threat of a section 114 notice” because of its growing cumulative overspend on SEND services provision, which has risen to nearly £130 million and is projected to increase to £153 million by March next year, more than the county council has in its financial reserves.
A section 114 notice, which Devon County Council’s finance director would be compelled to issue if the county council’s expenditure was likely to exceed its resources and it was unable to address the deficit, would be an effective declaration of bankruptcy.
It would be a last resort resulting in a loss of financial control by the county council’s leadership and would result in a 21 day suspension of non-statutory spending while the county council sought to get its house in order.
Several section 114 notices have been issued recently by councils across the country including Thurrock, Croydon and Slough.
They have led to the imposition of council tax increases of 10% in Thurrock and 15% in Croydon while government-appointed commissioners are compelling Slough Borough Council to sell property assets worth £600 million to resolve its financial difficulties.
The proposed governance review is intended to “rigorously examine and modify recent expenditure and to significantly improve governance to mitigate the current situation now facing the council” while introducing “effective scrutiny arrangements” for council decision-making.
It also aims to restore what the report describes as “external confidence in the council’s democratic legitimacy”.
An examination of the county council’s financial arrangements by an external auditor is also taking place and may result in additional review recommendations.
The proposed review will be considered next Tuesday at a meeting of Devon County Council’s procedures committee before going to the county council’s annual meeting for approval on 25 May.
It will take a year to complete and will be performed by a cross-party procedures committee working group.
UPDATE: This story initially reported that the decision to approve the proposed governance review would be taken by the county council’s cabinet on 10 May, as per its report. The county council subsequently confirmed that it had been mistaken, and that the review recommendations would be instead presented for approval at the annual meeting of the county council on 25 May.
