The performance of a council-run firm providing financial services has come under scrutiny in a peer review of South Holland District Council.
The reliability of financial data provided by Public Sector Partnership Services Ltd (PSPS), a local authority trading company wholly owned by South Holland District, East Lindsey District and Boston Borough councils, was a “concern”, according to a Local Government Association peer challenge.
A circa £1m deficit in South Holland’s 2022/23 revenue outturn report was “un-forecast due to issues with reliability of financial data provided by PSPS”, the report stated.
The local government finance skills and expertise within PSPS was also questioned.
As a result, South Holland District Council’s financial services arrangements – which are jointly managed by the authority and PSPS – must be “urgently addressed”.
The peer challenge report, which was conducted in July, read: “South Holland District Council’s financial operational and reporting arrangements are a cause for concern. The peer team consistently heard that the performance of financial services arrangements are impacting [the authority’s] ability to ensure sound financial and risk management and drive transformation.”
Concerns were also raised about governance, the implementation of finance systems, and the provision of support and timely information.
“Addressing these performance issues needs to be resolved as an organisational priority,” the report said.
Proactive measures have already been taken by the council and PSPS in response, the report noted, including PSPS commissioning a Chartered Institute of Public Finance and Accountancy (CIPFA) review.
“PSPS and [the council] need to work collectively on the outcomes of this review which will be critical to driving performance improvement,” the report concluded. “A major contributor to the issues faced has been recruitment and retention challenges within the finance service. The council needs to be satisfied that the required improvements are being made so it has confidence in being able to provide sound financial and risk management.”
Like other councils, South Holland is facing financial challenges as a result of increasing demand, cost and inflationary pressures, the report noted, which are “well understood” by its section 151 officer, who is “leading the organisational response”. As part of this, an Innovation, Transformation and Efficiency Board has been established.
However, it was “not apparent” to the peer team “how widely understood the [authority’s] financial position is across the organisation”.
The report also highlighted that savings plans beyond 2023/24, including what needs to be done to tackle the authority’s budget gap of £7.85m by 2027/28, “are yet to be articulated clearly”.
The council should therefore “develop a robust plan for future Medium Term Financial Strategy savings, efficiencies and income beyond 2023/24”.
—————
FREE weekly newsletters
Subscribe to Room151 Newsletters
Follow us on LinkedIn
Follow us here
Monthly Online Treasury Briefing
Sign up here with a .gov.uk email address
Room151 Webinars
Visit the Room151 channel
