Purpose of the report: To receive the Council’s Finance Improvement Programme (FIP) as considered by the Cabinet.
Andrew Burns, Associate Director of CIPFA and member of the External Assurance Panel
Anna D’Alessandro, Director of Corporate Finance
Mel Few, Cabinet Member for Resources
Nikki O’Connor, Strategic Finance Business Partner
Leigh Whitehouse, Executive Director of Resources
Rachel Wigley, Director of Financial Insight
Key points raised during the discussion:
1. The Director of Financial Insight introduced the report. In May 2018, the Chartered Institute of Public Finance and Accountancy (CIPFA) had been commissioned to undertake a review of Surrey County Council’s finances and finance function. The Finance Improvement Programme (FIP) was then developed and approved at Cabinet in September 2018 as the Council’s finances were precarious at the time and the underlying causes had not been addressed. An action plan was developed to build financial discipline and address the financial challenged, taking a financial management approach. The programme included a board chaired by the Cabinet Member for Resources, an officer board chaired by the Executive Director of Resources, and the External Assurance Panel. The FIP had achieved significant improvements such as: delivering significant efficiencies in 2018/19, setting a realistic budget for 2019/20 focused on systems providing timely data to service colleagues, restructuring the finance service to take a business partner approach, building knowledge, skills and behaviours and launching the Finance Academy. Moreover, the finance service was not being complacent and had now launched phase two of the FIP, which included making the most of the Digital Business and Insights (DB&I) programme. The key aims were to embed a partnership approach and accountability, and to offer insightful advice and information.
2. The Associate Director of CIPFA explained that he had not been part of the original CIPFA review undertaken in September 2018, as he had not been working for CIPFA at that time. His involvement with Surrey County Council had been separate from his CIPFA role.
3. The Associate Director of CIPFA stated that the transformation to Surrey County Council’s finances was a significant achievement, but it was important that efforts were made to sustain this transformation, which could be more difficult than the initial achievement and would require a continued focus on good financial management and buy-in from Members and the whole organisation. External involvement and examination, effective scrutiny and DB&I were also key.
4. A Member enquired what the cost of the FIP was. The Director of Financial Insight replied that it cost £700,000, which had been charged to the transformation programme over 2018/19 and 2019/20. These costs included the CIPFA review, project resources, process mapping and interim support to ensure business continuity over the transition to the finance leadership restructure.
5. A Member asked whether CIPFA had signed off on the process and when there would be another financial review of the Council. The Director of Corporate Finance said that the Council was using a CIPFA financial management model, which would be run every two years and was due to be run within the next six months. This model would produce a RAG (red, amber, green) rated matrix that would show what the Council needed to look at in the future. The Executive Director of Resources added that the Council had demonstrated to the External Assurance Panel that they were performing against the action plan, and this is how the Council had provided ongoing assurance, rather than calling CIPFA back in. Follow-up ‘Voice of the Customer’ meetings had also been conducted.
6. A Member noted the mention of the Finance Academy in the report and asked what the academy had achieved so far, the costs involved, who benefitted and how this would continue to develop. As the lead on the Finance Academy, the Strategic Finance Business Partner stated that it was aimed at three key sets of stakeholders: budget holders, finance staff and elected Members. For Members, to date the academy had developed a fundamentals programme that was run pre-Covid-19, and it had aspirations for a further two programmes: an insights programme for Members on specific committees, and another programme aimed predominantly at Cabinet Members. The Finance Academy could also be useful for newly joining councillors.
7. The Strategic Finance Business Partner continued to explain that there had been a significant restructure of the finance service, which included expectations of finance staff and required knowledge, skills and behaviours. The Finance Academy was developing a programme of learning and development offers to support this framework. The bulk of the work of the academy to date had been with budget holders across the organisation; to date, the budget holder workshop had been rolled out to over 200 budget holders. The workshop included information about the partnership agreement, as well as short videos and detail on revenue budget monitoring and the financial context of the organisation. There were significant aspirations in the budget holder stream of the academy, including developing more content on capital, income and commercialisation. A Member asked what proportion of budget holders the 200 figure represented. The Strategic Finance Business Partner responded that the target for that first course was 320 budget holders; the aim was that all 320 would have completed the workshop by the end of November 2020. It was difficult to encapsulate a finite number of budget holders within the Council, but there were tiers of director-level budget holders and then a greater number of middle-level budget holders. The service also aimed to target those who were not necessarily budget holders but whose work had financial implications.
8. Members congratulated the finance service on the turnaround achieved through the FIP.
9. The Director of Corporate Finance informed the Select Committee about a risk project conducted in partnership with the Audit and Governance Committee. There was a desire to completely overhaul Surrey County Council’s approach to risk, and EY had been appointed as risk management partners. The process had begun and initial conversations had been conducted with the Audit and Governance Committee, EY and the Corporate Leadership Team; as this was a complete culture change, the process was being conducted top-down. EY would work with the Council for the whole of the upcoming year, but most intensively for the next four to five months, in order to formulate and review a risk register, which would be linked up with the Performance Report. A Sub-Group was in the process of being formed to look at the process whereby the risk register would be regularly updated.
10. A Member requested an update on what Orbis currently comprised and how it was being reconfigured. The Executive Director of Resources replied that when the CIPFA report was written, Orbis had included finance, HR, IT procurement, property and business operations. Around the time of the report to Cabinet two years ago, the Surrey finance and HR teams had been withdrawn from Orbis. The three Chief Executives of the Orbis councils decided to undertake a wider review, which led to an agreement to formalise the removal from Orbis of Surrey’s finance, property and HR services. The Orbis partnership had committed to a period of three years from April 2020 of the partnership in its new form. The reason behind this decision was that Surrey wanted its own strategic flavour for finance and HR, and it was felt that Orbis was not delivering benefits in property.