CIPFA warns "weak" governance is hindering financial recovery at London borough

The comments came in a Government-commissioned report – handed to ministers in May this year and made public on Thursday (30 July) – that preceded a best value notice issued for the local authority.  

CIPFA carried out the review in light of the council's reliance on EFS, which has seen the council receive a total of £150m in support for 2025-26 and 2026-27.

Hillingdon's medium-term plan meanwhile forecasts further EFS requests in subsequent years unless savings can be found.

The reliance on EFS is partly due to a near-decade-long freeze on council tax increases between 2009 and 2018. It is also the result of spending exceeding budgets from 2024 onwards, according to the report.

CIPFA reported that a £31m overspend in 2024-25 "utilised virtually all available reserves" and noted that the council forecasts a further £36m overspend in 2025-26.

The report meanwhile said that a "culture of weak financial management and governance has built up that will make it more difficult for the council to extricate itself from the reliance on EFS".

It added: "The council has a poor record historically in delivering savings, and the achievement of a balanced budget for 2026-27 will require 100% delivery of savings of £21.1 million in that year.

"There has been significant churn in senior finance posts, and external and internal audit have raised significant concerns over poor data quality, limited capacity at a senior management level and the need to urgently strengthen financial planning and controls."

On governance, the report raised concerns about Hillingdon's plans for the creation of an Assurance Board, the council's lack of an overarching transformation plan, and "little urgency" among its political leadership in relation to transformation.

The report said that, while Hillingdon had recognised weaknesses in its arrangements, it is at risk of not being able to achieve the level of transformation needed "due to a lack of buy-in at all levels".

The report also detailed the impact of politics on the council's governance, noting that "there is little urgency" among councillors in relation to transformation.

CIPFA did, however, note that senior officers were aligned and working together effectively.

The report said: “The council is not yet demonstrating sufficient ambition to resolve its budget gap. The council has entered into an agreement with the LGA to set up an assurance board which has subsequently been retitled an improvement board recognising the fundamental need for change. The terms of this still need to be agreed, including its ability to advise or caution.”

It added: “Until Hillingdon identifies and delivers the savings required and embeds a much more robust culture of financial management the council will have to continue to rely on EFS. Much will depend on the role of the assurance board in driving this financial recovery.”

Publication of the May report comes two weeks after the Government’s decision to issue a best value notice for Hillingdon, which highlighted systemic governance weaknesses relating to the effectiveness of scrutiny and risk management arrangements, as well as concerns about organisational culture.

A spokesperson for Hillingdon Council said: “It’s important to note that this review was undertaken in May as a snapshot of the council’s financial position, with publication of the report delayed until July. Many of the findings and issues have already been highlighted by the council itself and we are already taking action to make significant strides towards improved financial sustainability. 

“This includes the improvements already underway through our Finance Modernisation Plan and Governance Review Improvement Plan providing openness and transparency on our progress which will be scrutinised by government.

“We have never shied away from the financial challenges facing the council and the difficult decisions needed to restore the authority’s finances. We continue to work at pace to address these issues, strengthen governance and ensure Hillingdon is on a stable and sustainable footing for the future."

Adam Carey