Barrie Morris (Grant Thornton), supported by Dan Povey (Grant Thornton) introduced the item and discussed:

a)    A final version of this report would be provided to the Committee in early 2026;

b)    In terms of financial sustainability, significant weaknesses had been identified, and key recommendations had been made to combat financial challenges that the Council faced;

c)    Recommendations covered developing and implementing the Council’s transformation plan, which in turn identified savings needed to balance the medium-term financial strategy, to protect the level of reserves held;

d)    Focus was being placed on reducing the annual dedicated school grant deficit, which was significant and growing fast;

e)    Delivering mitigating actions to manage cost and demand in social care, within both adults and children’s services, which were issues faced by many English local authorities;

f)     Economy efficiency and effectiveness had been identified as an area of weakness, and one key recommendation had been raised in relation to the SEND improvement notice the Council was issued in 2023;

                      i.        Improvements had been made since the notice was issued;

g)    No key recommendations or identification of significant weaknesses for governance arrangements had been made;

h)    Opportunities to strengthen arrangements had been identified across several areas, including delivering the Armada Way action plan, which was progressing well, enhancing procurement and contract management oversight, and continuing to improve performance management.

Supported by Ian Trisk-Grove (Service Director for Finance), in response to questions, the following was discussed:

i)     A need to focus on developing a pipeline of savings that the Council could use to cover multi-years and would allow it to progressively address any budget gaps, of approximately £30 million, over the period of the Medium Term Financial Strategy (MTFS);

j)     Long term savings initiatives;

k)    The opportunity to identify and embed the transformational changes required, including the savings plans already in place;

l)     Many councils were relying on reserves, which was only a short-term solution and could not be repeated once depleted;

m)  It was right to view this report as a clear warning and a prompt for continued focus and action;

n)    A number of local authorities were in significantly more challenging positions, with many seeking exceptional financial support from government to fund day to day activities and several had issued Section 114 notices, meaning they had effectively run out of money, while others had approached government early to avoid reaching that point. Statutory reporting confirmed this wider trend. Plymouth City Council was not at that stage, but this was the moment to take action to avoid deterioration;

o)    Plymouth City Council's (PCC) financial sustainability depends on the resources it received and therefore had to focus on what it could control: delivering statutory services as efficiently as possible, learning from councils that had required support or intervention, and reviewing the affordability of discretionary services;

p)    The Dedicated Schools Grant and Education Health and Care Plan pressures were of significant national concern;

q)    The assessment was based on the arrangements in place in 2024 to 2025 and the MTFS so the auditors had not attempted to predict outcomes of the fair funding review or SEND reforms, as government announcements had not yet been made, but future multi-year settlements would help with planning;

r)    The Council is actively developing a medium- and long-term transformation programme, with dedicated programme management, to address major demand pressures in areas such as children’s placements, adult social care and homelessness;

s)     Action was ongoing, but this remained a point in time within a shifting national context;

t)     It wasn’t yet known how the new three-year settlement would be structured, but in principle it was significantly more helpful for future planning, particularly for programmes such as City Help and Support that were designed to deliver medium and long-term change.