External auditor publishes ‘lessons learnt’ report on local government reorganisation
Grant Thornton has produced a report setting out the challenges and common governance issues involved in local government reorganisation.
The report, 'Learning from the new unitary councils', also includes a good practice checklist for councils embarking on reorganisation.
The report mainly focuses on the creation of unitary councils that replace two-tier county and district council arrangements and draws on insight from annual audit reports from eight unitary councils created since 2019 that have been audited by Grant Thornton.
The 'good practice' checklist is broken down by category in the report and includes key messages relating to the transition period, financial sustainability, governance, and 'effectiveness, economy, efficiency'.
On governance, the report said councils which understand the value of strong governance foundations and value risk to support performance and financial sustainability "have had a stronger start".
It added that understanding the value of risk management varies across the new councils as it does across local government more widely.
It also noted that some councils have "underestimated the complexity" of internal audits in their transition year and should build in more time for them in the transition period.
In addition, the report raised concern about the lack of financial statements in some legacy councils.
On the challenges involved in local government reorganisation, the report highlighted short implementation timescales and the pressures of delivering services during the transitional period.
The report also noted that difficulties can arise due to a lack of ownership of some sovereign councils for the approved unitary model and a shared business case.
The need to undertake financial and service planning for the new unitary when many senior officers aren't in role in a timely way to make key decisions can also be problematic, Grant Thornton noted.
The report also said that once reorganisation has taken place, it will take several years to fully realise the benefits planned from reorganisation, "and it will require sustained commitment from senior stakeholders to deliver".
The report said: "Given the service demands on local government and the impacts of cost of living and inflation it's unsurprising that the financial benefits of LGR [local government reorganisation] are yet to materialise for all new unitary councils as planned.
"At the same time the costs of transformation are significant and needs keeping under control if councils are to be financially sustainable. In some cases, the cost of transformation has escalated significantly."
Adam Carey
