External review of BCP Council highlights various concerns

Experienced local government official Lesley Seary provided the assessment of the council at the request of the Government's Department for Levelling Up, Housing and Communities.

Following field work in March, her final report was submitted to the department in June.

It was published by the Government on Thursday, August 3, alongside a best value notice as ministers demanded improvement from the local authority.

The external assurance review was announced last summer after the department blocked the then Conservative council administration's plan to sell thousands of beach huts to a company it would have had whole or majority ownership of to fund its transformation programme.

The full copy of Ms Seary's review can be viewed on the Government's website or on the following link BCP Council external assurance review.pdf

Her exective summary, key findings and recommendations can be found below.

Executive summary

The merging of the legacy councils to form Bournemouth Christchurch and Poole (BCP) was always going to be complex. The cultural, financial and service delivery change required was necessarily substantial. The successful management of these changes has the potential to improve services while delivering efficiencies. That opportunity remains but to realise these potential gains BCP must make some significant changes over the next year. This report sets out where and why those changes need to be made.

The formation of BCP was not supported by all the preceding councils and there was a period of uncertainty until the summer of 2018. This led to a difficult start with a short time to prepare for reorganisation. Less than a year later the new Council found itself, along with all other authorities, needing to manage the local response to the Covid pandemic.

There remains a sense of three councils within one in BCP. Creating an allegiance to a new single council takes time and many elected Members show a strong loyalty to their former council. Covid lockdowns and the move to remote meetings coming shortly after the start of the new Council has meant that valuable time was lost in creating a new culture and a sense of unity. The politics in the new council have been contested, complicated and fragmented with changes in administration and three Leaders in four years. These changes have led to uncertainty which has impacted on longer term planning and consistency of direction.

Member relationships have been very poor. Meetings have been acrimonious with a high number of complaints to the standards committee. Relationships between councillors and officers have not been positive and a number of people have described the culture in recent years in very negative terms.

The council’s medium term financial plan (MTFP) and budget, as currently agreed is unrealistic. It is predicated on the delivery of an overly ambitious transformation programme both in terms of levels of savings and timescales for delivery. BCP always needed and still needs to deliver widespread transformation, both in terms of bringing together staff, pay and conditions, ICT systems, property and ways of working from the legacy councils. It was the need to fund this transformation programme that led the council to pursue non-traditional financial options which proved ultimately fruitless. The council has now set a budget for 2023/24 in line with conventional local government financial practice. However, it is clear that the council’s future financial sustainability is based on the successful delivery of the transformation programme and delivering the projected savings to the agreed timetable. The financial targets in the transformation programme (and in the budget) are at the highest end of the projected range. This is highly ambitious and carries high risks around delivery of the programme on time and to budget. The Council needs to review the programme as a matter of urgency. The council would benefit from commissioning an external financial resilience review to provide support and challenge in setting a new MTFP and budget.

The council established a regeneration company, BCP FuturePlaces Ltd in 2021. Concerns have been expressed to me about the governance and remit of BCP FuturePlaces Ltd. The company now has an independent chair and non-executive directors. There is a commissioning agreement with BCP FuturePlaces Ltd but it has not been adhered to and as a result there seems to have been a degree of mission creep. The chair, Lord Kerslake and the council’s chief executive both recognise that the relationship between the council and BCP FuturePlaces Ltd needs improving. The council should agree a business plan with a portfolio of priority projects and clear timescales for delivery.

In February 2022 Ofsted published the report of its inspection of children’s services, which were found to be inadequate. The council is embarking on an improvement journey supported by a Department for Education (DfE) advisor and a sector led improvement partner. The council has a new experienced director of children’s services who has recruited a new management team. They are making inroads into the range of challenges they have inherited. Ofsted carried out a monitoring visit in October 2022 and the DfE advisor also provided a report the same month which said that there are cautious grounds for optimism about the future of the services. The improvement journey will take years rather than months and the council will need to invest time, energy and resources into improving children’s services.

The council is facing significant pressures and challenges over the coming year as set out in this report. The council recognises this and the chief executive has carried out his own internal governance review and set out a number of recommendations which are in the midst of implementation.

There is enormous potential across Bournemouth, Christchurch and Poole and a real commitment from everyone I met to improve the lives and opportunities for all its residents, businesses and visitors. Whilst there are challenges, the council are aware of these. Fundamental to the change required is the setting of a far more positive culture and a sound approach to the council’s finances. The council needs to use the fresh start provided by the local elections to reset the culture of the council and to agree a clear corporate strategy and priorities to deliver high quality services for its residents, businesses and visitors. If the council moves swiftly to deliver these recommendations then I believe they should be able to make the necessary improvements.

Key findings

The financial sustainability of the council is vested in the success of its transformation programme. This programme has highly ambitious savings and delivery targets and needs immediate review by the council. Following this review changes will need to be made to the MTFP. It is questionable as to whether the transformation programme is deliverable to the timeline currently set out. The programme has a significant amount of time critical change which needs to be delivered in 2023/24 including pay harmonisation, a significant reduction in posts in the organisation and new ICT systems. The sequencing of these changes is key and will need reviewing. As a result of the doubts around the delivery of the transformation programme and its savings the budget for 2023/24 and future years is challenging and contains a number of significant risks as outlined by the chief executive and the director of finance in their section 25 report accompanying the budget. The 2023/24 budget has £6.5m of unidentified transformation savings. These savings will need to be revenue not capital, attributable to the general fund and in budgeted rather than unbudgeted expenditure. The council needs to undertake a robust and critical review of the transformation programme and assess whether the level of savings stated is deliverable and whether the timescales are realistic. The council needs to review its MTFP, establish a sound budget setting process and begin the budget preparation as soon as is practicable after the elections to ensure that the council can agree a complete and robust budget for 2024/25 and future years. The monitoring officer has recommended the development of a budget policy framework in the constitution which should assist this process. To support the budget preparation the council should commission an external financial resilience assessment to provide challenge and assurance.

The governance culture needs significant improvement in the short term. At its inception in 2019 the Council was led by the Unity Alliance – an alliance of Liberal Democrat, Labour, Green and Independent Members from groups in Poole, Christchurch and Bournemouth. In 2020 the Conservative group took control with a minority administration. They subsequently formed a majority administration and at the time of the local government elections in May 2023 the council continued to be led by a Conservative administration but without overall control. During its first four years the council has had three different Leaders. These changes have led to a lack of clarity and consistency in direction and priorities. They have also led to political tensions. Both the Local Government Association (LGA) peer review and my own observations recognise that there is an unhealthy member culture. This has at times been unprofessional and divisive and has often resulted in poor behaviour in the council chamber. Scrutiny is largely internally focused and centres on pre-scrutiny of cabinet decisions. Members have also been too involved in the operational management of the council companies and council services. However it is difficult to see how the council can move to improve scrutiny and governance until the issues of the poor member culture are resolved. A new council post the elections in May offers the opportunity to reset the culture of the organisation and to set a new tone for member / member and member / officer relationships. It is important the respective group leaders commit to improving governance and behaviours based on the Nolan principles. The induction programme for new councillors should have a strong focus on behaviours. It would also be beneficial for leading members in the cabinet and the shadow cabinet to take advantage of the LGA mentoring programme. The council should continue to engage with the LGA and to accept the full range of support the LGA is offering.

The purpose of BCP FuturePlaces Ltd needs to be reviewed and a business plan and priorities agreed which align with the council’s corporate strategy. The council has three arm’s length companies – BCP FuturePlaces Ltd, Bournemouth Building and Maintenance Ltd and Seascape Group Ltd. In 2021 the council established a company, BCP FuturePlaces Ltd, to carry out regeneration projects on behalf of the council. Some concerns have been expressed to me about the transparency of the governance of BCP FuturePlaces Ltd. The original governance structure did not reflect good practice in terms of governance and elected Members were too involved in the day-to-day operational management of the company and in commissioning activity. BCP FuturePlaces Ltd now has an independent chair and three new non-executive directors. There have also been concerns expressed about mission creep and a lack of clarity around the priority projects. The new chair and board of BCP FuturePlaces Ltd recognise this and are committed to working to build positive relationships with councillors and officers. The chair has initiated a review of key aspects of the work of BCP FuturePlaces Ltd and has begun the process of developing a business plan for agreement with the council. The council should review its original purpose for BCP FuturePlaces Ltd and agree an annual business plan which sets out clear priority projects and timescales for delivery. The council would benefit from having a more co-ordinated approach to carrying out its governance role in relation to its companies by setting out a clear timetable for agreeing the annual business plans for all the companies and receiving mid-year and end of year reviews.

The council’s key priorities embodied in the Big Plan and the corporate Strategy need to be integrated and reviewed to reflect the priorities of the new administration. The changes in administration, outlined above, have led to a lack of clarity and consistency about the direction and priorities for the council. The council currently has ‘The Big Plan’ which sets out five big projects that the council states will ‘deliver big changes across the whole area and support the creation of 13,000 jobs’. The Big Plan is primarily focused on regeneration and place. The council also has a corporate strategy which sets out the council’s vision, mission, ambitions, priorities and values. It is not clear how these work together. In the immediate aftermath of the elections it will be important for the council to understand and agree the priorities of the new administration and develop a unified corporate plan with a focus on both people and place, and a roadmap for the next four years.

The council’s senior leadership team requires strengthening. The council has a very experienced chief executive but an inexperienced senior leadership team. Currently the chief executive has too many direct reports and this is diverting his focus towards day-to-day management rather than strategic leadership. The chief executive recognises this and has agreed a restructure to reduce the number of his direct reports and to add strategic capacity and capability to the senior team. There are currently two posts that are not filled on a permanent basis. It is important that these two vacant posts are filled as soon as is possible. The leadership team, both individually and as a team, needs development and support so that they can act more effectively as a strategic and corporate leadership team. This should enable the chief executive to spend more time on strategic leadership and building the culture of the organisation.

Recommendations

• The council reviews the Transformation programme and agrees a realistic and deliverable programme by October 2023. The council sets up effective mechanisms for Member oversight and monitoring of the delivery of the programme by June 2023.
• The council establishes a sound budget setting process and begins preparations for the 2024/25 budget as soon as possible after the local government elections and has proposals drafted for a sustainable MTFP and three-year budget by the end of September 2023.
• The council commissions an external financial resilience review to report by September 2023 to enable it to inform the MTFP and budget setting.
• The council, with the active leadership of the respective group leaders, uses the opportunity of a new Council to reset the Member / Member and Member / officer culture and relationships. The new council must use the support offered by the LGA and set up a comprehensive programme of member induction and an on-going programme of member training. The induction programme should be in place by June 2023 and the ongoing programme by July 2023.
• The new council agrees a corporate strategy and clear priorities by July 2023.
• The council agrees a business plan for BCP FuturePlaces Ltd by September 2023 which sets the purpose of BCP FuturePlaces Ltd and a portfolio of priority projects with timescales for delivery.
• The council puts in place a regular annual cycle for the business plans, mid-year reviews and year end reviews of all its companies to be reported to the appropriate scrutiny and decision-making bodies. This should be in place by June 2023 to begin the 2024/25 process.
• Permanent recruitment takes place into the vacant corporate director posts by November 2023 and an externally facilitated development programme is put in place for the senior leadership team.