How my Simple Question Helped Change RBWM’s Financial Governance and Processes 

During the 2019 election campaign there were promises of more spending by Edward Wilson who stood with Malcolm Alexander as Conservative candidates in Clewer & Dedworth West.

After I won the ward seat for Clewer & Dedworth West I did some digging around and asked the following question of the Lead Member for Finance, Cllr. David Hilton, on 25th June 2019 at my 2nd ever Full Council meeting. Little did I realise what I had set in motion…

In last year’s budget there was a line “CC52 Clewer & Dedworth Neighbourhood Improvements £350,000”. On enquiring how this money was invested officers tell me that £386,943 was spent so there appears to have been a £36,943 or 11% overspend. How was this overspend allowed to happen and can you ensure us that you will not overspend again this year?

Councillor Hilton responded that this was the first time in his long experience that a Councillor has raised, as an issue, the spending of more money in their ward rather than less. However, the Councillor raised a serious issue of budgetary control. New in his role his focus up to now had been on the revenue budget, but when he turned his attention to capital this was exactly the sort of question he would be asking. 

There were two projects for the Dedworth area, one termed Pave Dedworth and the other Clewer & Dedworth Neighbourhood Improvement. The total commitment was £450,000 with £70,000 of the Pave Dedworth project slipping into the 2019/20 programme. The most up to date information projected a £56,000 overspend, rather more than the sum in the councillor’s question.

He believed that the Clewer & Dedworth Neighbourhood Improvements project was made up of a number of individual parts and it could be that the estimated costs were low. No detailed work had been done but, with the assistance of the Head of Finance, the overspend would be investigated. He suspected capital monitoring could be improved and he had asked the Head of Finance to review the process to identify improvements and take the necessary action to make capital monitoring more robust. He would write to Councillor Davey when he had more detailed information on the overspend. 

By way of a supplementary question, Councillor Davey commented that 14 roads were updated at a cost of £215,000; four paths at a cost of £26,000; £25,000 was spent on Sutherland Grange and £21,000 was spent on Spencer Denny. These were all random amounts, there were no projects as such that capital money could be allocated to, for example a swimming pool, where an overspend would be more expected.

Councillor Hilton responded that if there was a significant project, energy was put into estimating the cost and therefore it was more likely to be accurate. If there was a string of projects there may be a greater risk of error. However he would write to Councillor Davey with what exactly happened. 

Duncan Sharkey, MD of RBWM at the time, obviously had concerns around finance since joining and the above acted as the perfect reason for him to call in CIPFA in July 2019, as indicated in the CIPFA REVIEW OF GOVERNANCE – FINAL REPORT published a year and a day later.

The executive summary is below and you might like to ask the following candidates for Clewer & Dedworth, who were all part of the Conservative administration in 2015-2019 for their take on the CIPFA Report:

• Nicola Pryer, Conservative candidate 2023 for Clewer East, 2015-19 she was Conservative Cllr for Clewer North
• Hashim Bhatti, Conservative candidate 2023 for Clewer & Dedworth East, 2015-19 he was Conservative Cllr for Clewer North
• Phillip Bicknell, Conservative candidate 2023 for Clewer & Dedworth East, 2015-19 he was Conservative Cllr for Park and Lead Member for Windsor
• Edward Wilson, not selected by the Conservatives for 2023, showing blank on the election forms, 2015-19 he was Conservative Cllr for Clewer South.

1. Executive Summary 

1.1. CIPFA were appointed by the Managing Director and the Section 151 Officer at the Royal Borough of Windsor and Maidenhead (RBWM), in July 2019, to review the governance, approval and management processes in relation to the Clewer and Dedworth Neighbourhood Improvements capital scheme, which was approved at an estimated cost of £350K for the 2018/19 budget. 

1.2. The Managing Director was concerned that the scheme failed to meet RBWM’s overall objectives, that it was not subject to a proper prioritisation process, that no business case or plan had been produced regarding the scheme’s deliverables and that there was no plan to demonstrate how it would be managed. 

1.3. The results of this work were included in an initial report to Members in August 2019, our overall conclusion was that there was a lack of transparency around the financial implementation of capital schemes. 

1.4. The issues raised in the first phase of our work highlighted further concerns about financial monitoring in RBWM, as well as the effectiveness of financial governance and the role of the finance function in overseeing the financial governance of RBWM. As a result, we were commissioned to assist RBWM in resolving some of the issues raised, to assist in the preparation of the 2020/21 budget and in the production of a new Medium Term Financial Strategy. The Managing Director also requested that any further governance or compliance weaknesses should be highlighted and included in a further report at the end of the assignment. This work commenced in September 2019 and details of the tasks undertaken are provided in Appendix B. 

1.5. In the second phase of our work we have recommended that RBWM needs to address a large range of issues in relation to governance and financial management in order to demonstrate that it is managing its finances in a legal, transparent, professional and competent way. These issues and those subsequently found are set out in the report. 

1.6. Section 7. below contains a List of Improvements Implemented in Response to Initial Recommendations 

1.7. Our overall concern that the lack of financial transparency and Medium Term Financial Planning over a number of years has masked the financial problems that RBWM were facing and that, potentially, could have been avoided. For example, Council Tax was either reduced or frozen over a number of years. It is difficult to be precise over the exact basis of decision making but it was apparent that there had been a poor officer culture and lack of physical capacity and capability coupled with dominant members. This led to no appropriate challenge or recognition that challenge is a good thing. 

1.8. Although RBWM has pockets of deprivation it is still one of the least deprived councils in the country with the benefits of a high council tax base, 3 increasing business rates, high land prices and high income levels could easily have been self-sustaining. However, despite setting a challenging budget for 2020/21 and developing a medium term financial strategy it is now facing an uncertain future, having to identify large savings in a short space of time due to the impact of Covid19. With this added pressure potentially meaning it may have to issue a S.114 notice and may not be able to set a legal budget in future years. 

1.9. The standards of financial support within the Council were not at an appropriate level and must be improved further. This was underpinned by repeated removal of capacity from the organisation that left it weak and unable to deliver basic good governance or change successfully. This was coupled with a lack of corporate or team working culture. 

1.10. There appeared to be little differentiation between officer and senior member roles and responsibilities, who appeared to be treated as senior executives rather than elected members. There was no recognition of the problems in governance this would likely create. 

1.11. In summary, the financial governance issues that need to be addressed include:  

• Reporting and transparency, including revenue and capital budget setting, monitoring and medium term financial planning;  
• Treasury Management approval, reporting and monitoring;  
• Debt collection and appropriate provision for bad debt;  
• The change in council culture required to achieve more transparency over decision making and compliant governance;  
• Reviewing the Member protocols that govern relationships between Members and officers;  
• Changing the culture and ability of the finance function to one that is more challenging and prepared to ensure greater accountability of decision making and a substantially higher level of compliance.  
• Addressing the “silo” culture amongst officers where significant decisions have not been taken in a corporate or collegiate way 

1.12. Our work has been focussed on the budget reports in 2018/19 and 2019/20 and limited examination of previous years when the decisions to reduce Council Tax were made. In reading these reports the risks of low reserve levels, the lack of medium term financial planning and alternative options are not set out clearly in the reports for Members and the Public. The poor governance, culture and any issues, including those between Officers and Members were not set out in the Annual Governance Statements. 

1.13. The Council, prior to COVID-19 had started to make progress under new political and officer leadership, the new robust approach to the Medium Term Financial Strategy had been welcomed and Members had commented on improved transparency in financial reporting. Difficult decisions were made in putting forward the 2020/21 budget, including removing car parking discounts for residents and reducing the Council Tax Reduction scheme discount for working age claimants. 

1.14. Officers and Members were considering future strategies with financial planning, particularly climate change. 

1.15. The report is written while RBWM, like all others, has had to deal with the impact of COVID-19. There is uncertainty as to whether the additional costs and lost income caused by the pandemic will be fully covered by additional government funding. 

1.16. We would like to thank the management team and the finance team, with whom we worked closely in undertaking this review, for their support and cooperation and willingness to take on board the changes recommended. A list of those interviewed in the first phase of our work is provided at Appendix A.

CIPFA REVIEW OF GOVERNANCE – FINAL REPORT

Thank you.

Cllr Jon Davey

Independent

Clewer & Dedworth West

Photo by Josh Appel on Unsplash