Agenda and minutes

It was proposed and seconded “that Mr. S. L. Bray CC be elected as Chairman”.

The motion was put and carried unanimously.

There being no other nominations, it was declared that Mr. S. Bray CC be elected as Chairman of the Corporate Governance Committee.

RESOLVED:

That Mr. S. L. Bray CC be elected Chairman of the Corporate Governance Committee until the date of the Annual Meeting of the County Council in 2027.

Mr. S. L. Bray CC – in the Chair

It was proposed and seconded “that Mrs K. Knight CC be elected as Deputy Chairman”.

The motion was put and carried unanimously.

There being no other nominations, it was declared that Mrs. K. Knight CC be elected as Deputy Chairman of the Corporate Governance Committee.

RESOLVED:

That Mrs. K. Knight CC be elected Deputy Chairman of the Corporate Governance Committee until the date of the Annual Meeting of the County Council in 2027.

The minutes of the meeting held on 27 March 2026 were taken as read, confirmed and signed.

It was reported that the Chief Executive had not received any questions.

The Chief Executive reported that no questions had been received under Standing Order 7(3) and 7(5).

There were no urgent items for consideration.

The Chairman invited members who wished to do so to declare any interest in respect of items on the agenda for the meeting.

Mr. G. Grimes (Independent Member) declared an other registrable interest in Agenda Item 10 in respect of the work he undertook with schools in relation to budget deficits.

There were no petitions.

The Committee considered a report of the Director of Corporate Resources which presented the external auditor’s progress report on the audit of the County Council and the Pension Fund 2025/26 financial statements.  A copy of the report, marked ‘Agenda Item 9’, is filed with these minutes.

The Chairman welcomed Ms Helen Lillington from Grant Thornton LLP, the Council’s external auditors, to the meeting.

The draft 2025/25 financial statements were almost complete and would be published on the Council’s website by the statutory deadline of 30 June 2026.  As set out in the Audit Plans, interim audits had taken place; good progress had been made and the final audits would begin as planned.  The audit was scheduled to be completed by the end of November 2026 and reported to the Corporate Governance Committee at that time, along with the Auditor’s report on the Value for Money arrangements of the Council.

RESOLVED:

That the progress of the External Audit of the financial statements be noted.

The Committee considered a report of the Director of Corporate Resources which provided an update on risks in the Corporate Risk Register, emerging risks and the internal audit of the Council’s risk management process.  A copy of the report, marked ‘Agenda Item 10’, is filed with these minutes.

As part of this item, the Committee also received a presentation from the Director of Children and Family Services on the risk relating to ‘if maintained primary schools submit significant licensed deficit budgets over time creating a financial burden for the Council, then individual schools may fail’.  A copy of the presentation is filed with these minutes.

Arising from the discussion, the following points were made:

Presentation

i)               It was proposed that finance experts would be commissioned to look at all local authority maintained school budgets, and it was confirmed that these were external to the local authority.  The Department for Education used these experts to intervene in local areas where there was concern around the financial viability of schools.  In response to a query around what communication had taken place with school communities about this work, the Director of Children and Family Services stated that a meeting had taken place with local authority maintained schools at the end of the last summer term to discuss the issues being faced.  It had been made clear that a school reorganisation programme would be developed and a range of communication had been delivered over the course of the academic year.  More recently, the Director of Children and Family Services had attended a meeting of the Leicestershire Primary Head Teachers to provide an update on the arrangements going forward and what would be taking place in the autumn in terms of the outcome from budget submissions.  Assurance was given that work had taken place in the established framework around the submission of budgets.  However, schools had been asked to apply for a licensed deficit and provide a clear action plan about how they intended to mitigate this and bring the budget back into surplus. 

ii)              In relation to Church of England (CoE) schools, it was queried whether consideration had been given to academisation into DBE Multi-Academy Trusts (MATs), or whether local authorities could set up their own MATs.  The Director stated that it would be for the governing boards to decide whether they wanted to join a particular MAT.  The CoE had published clear criteria about its expectations of CoE schools.  The local authority would explore a range of options with schools around whether they were to be academised or not.  One issue was the viability, pupil numbers and forecasts as academisation alone would not resolve this.  The local authority already provided services and functions to schools as a MAT would, and the Director commented that there would be little to gain by formalising that arrangement, and it could incur additional unnecessary costs.  The maintained schools were keen to remain with the local authority.

iii)            A member commented that local authority maintained schools offered something unique in local communities and teachers did not always like the way that MATs operated.  However, where a school used local authority services, there was often a lack of consistency which meant that relationships were lost.  It was appreciated that a number of issues were outside the control of local schools, but it was queried how the local authority could improve its auxiliary services to support schools to run more effectively.  As part of the school reorganisation programme, the County Council had invested £1m in enhancing the support provided to schools across a range of areas.  This was  ...  view the full minutes text for item 84.

The Committee considered a report of the Director of Corporate Resources which advised of the action taken and the performance achieved in respect of the treasury management activities in the final quarter of 2025/26 and the overall position for 2025/26.  A copy of the report marked ‘Agenda Item 11’ is filed with these minutes.

Arising from the discussion, the following points were raised:

i)               A member queried the term ‘under borrowed’, to which the Director of Corporate Resources explained that the Council’s requirement for borrowing was called the capital financing requirement.  This was the total amount of borrowing that the Council required to fund its historic capital programme.  The Council then had to decide, looking across all its balances, how much it needed to borrow to fund that requirement.  This could be borrowed externally through loans, or from itself (internal borrowing).  Essentially, the Council was using its investments to fund borrowing rather than going to the external market.

ii)              A member commented that the fiscal rules in the appendix to the report suggested that the bank rate would ease and queried the  level of confidence that this would be the case.  The Director stated that although inflation was high, it was set to ease.  Gilt yields moved around and were dependent on confidence.  There was a degree of uncertainty which would continue to be monitored.

iii)            It was confirmed that, since May 2025, the Council had repaid £70.9m of external debt, and had reduced the capital programme funding shortfall from £84m to £65m. 

iv)            It was questioned whether the early debt repayments, including a recent repayment of £26.9m, would deliver a net financial saving for Leicestershire taxpayers, specifically after taking into account both the interest saved from repaying the debt early and the investment income that the Council would have otherwise earned on those funds, and whether the overall financial position was a net benefit to the taxpayer.  The Director stated that the primary purpose of repaying debt early was to reduce the revenue implications of capital financing costs.

v)             A member acknowledged that there was a cost implication to the Council to repay debt early as it had cost 3-4 years worth of interest payments.  In view of the forthcoming Local Government Reorganisation, it was stated that there would be little benefit to the current authority as it would not exist in 2028.

RESOLVED:

a)    That the contents of the Annual Report for 2025/26 be noted;

b)    That the Annual Report will be submitted to the Cabinet for consideration at its meeting on 21 July 2026.

The Committee considered a report of the Director of Corporate Resources which informed of the Council’s compliance with the Chartered Institute of Public Finance and Accountancy (CIPFA) Financial Management Code for the financial year 2026/27.  A copy of the report marked ‘Agenda Item 12’ is filed with these minutes.

RESOLVED:

That the report be noted.

The Committee considered a report of the Director of Corporate Resources which presented the Head of Internal Audit Service Annual Report 2025/26.  A copy of the report marked ‘Agenda Item 13’ is filed with these minutes.

The Head of Internal Audit Service had delivered an overall conclusion of ‘Reasonable Assurance’ that the Council’s governance, risk management and control had remained overall adequate and effective during 2025/26. 

Assurance had also been provided by Nottingham City Council Internal Audit, which had completed all of its planned audits of East Midlands Shared Services’ (EMSS) main financial systems and had given an overall very positive conclusion that the fundamental systems and controls within EMSS were sound, although it was noted that work was still required in specific areas.

A member questioned why the Internal Audit function received a “Generally Conforms” assessment against internal audit standards and how improvement needs were judged as either incremental or more fundamental.  The Head of Internal Audit Service explained the process involved in populating an extensive formal conformance assessment model.  He further explained that most of the improvement actions identified were relatively small refinements rather than major weaknesses.  However, as an example, the new standards required internal auditors to demonstrate root cause analysis more clearly.  While root cause analysis was not new to internal auditing, the standards now placed greater emphasis on evidencing and demonstrating it.

RESOLVED:

a)    That the Internal Audit Service annual report for 2025/26 be noted;

b)    That a copy of the Annual Report for 2025/26 be circulated to all members of the County Council for information.

The Chairman sought and obtained the consent of the Committee to vary the order of business of that set out on the agenda.

The Committee considered a joint report of the Director of Corporate Resources and the Assistant Director of Law and Governance which sought support for the revised Local Code of Corporate Governance.  A copy of the report marked ‘Agenda Item 15’ is filed with these minutes.

RESOLVED:

That it be confirmed that the Local Code of Corporate Governance (May 2026) has been reviewed and amended as necessary to ensure that it remains relevant to the Council’s work and practices.

The Committee considered a joint report of the Director of Corporate Resources and the Assistant Director of Law and Governance which presented the provisional draft Annual Governance Statement (AGS) prior to it being published on the Council’s website by 30 June 2026 alongside the draft County Council Statement of Accounts for 2025/26.  The report also provided an outline of the background and approach taken to produce the County Council’s 2025/26 provisional draft Annual Governance Statement.  A copy of the report marked ‘Agenda Item 14’ is filed with these minutes.

During the review of the provisional draft AGS, two new significant governance issues were identified that required reporting – Members Code of Conduct issues and the Deficit Schools Balance.

The Council was satisfied that appropriate governance arrangements were in place and continued to be regarded as fit for purpose.  Over the coming year, it was proposed to take steps to address any matters to further enhance governance arrangements, and the Council was satisfied that these steps would address the need for any developments that had been identified in the review of effectiveness and would monitor their implementation and operation as part of the next annual review.

RESOLVED:

a)    That the provisional draft Annual Governance Statement (AGS) 2025/26 be noted and that it is consistent with the Committee’s own perspective on internal control within the Authority;

b)    That it be noted that there are two significant governance issues reported in the provisional draft AGS 2025/26;

c)    That it be noted that the provisional draft AGS 2025/26, which may be subject to such changes as are required by the Code of Practice on Local Authority Accounting, has been prepared in accordance with best practice.

The Committee considered a report of the Director of Corporate Resources which detailed the counter fraud activities that had taken place across the Council during the 2025/26 financial year.  A copy of the report marked ‘Agenda Item 16’ is filed with these minutes.

In response to a query, the Director of Corporate Resources stated that there had been 17 new investigations in the last year.  However, not all of these had been considered to be fraud, and had been dealt with internally.  Examples were given of the types of investigations.  Assurance was given that the Council had a zero tolerance approach to fraud, corruption and other financial irregularities. 

RESOLVED:

That the report be noted.

The Committee considered a report of the Director of Public Health, Communities, Law and Governance which provided an update on the Council’s Resilience and Business Continuity activities, work undertaken with other Leicester, Leicestershire and Rutland local authorities, and wider multi-agency resilience activities in the period April 2025 to the end of March 2026.  A copy of the report marked ‘Agenda Item 17’ is filed with these minutes.

Arising from the discussion, the following points were raised:

i)               In response to a query around training, the Director stated that officers were not given any specific details in advance around the role they would be expected to take.  It was also noted that all training and attendance at an incident was in addition to the individual’s usual role.  Any officer above Grade 15 was included on the senior manager on-call rota, which meant that, in the event of an incident, they would be the responsible officer during the time they were on call (usually for a week at a time).  Officers on Grades 11 – 15 could volunteer to get involved, and a number of Heads of Service were involved at a more tactical level.

ii)              A member questioned whether some of the learning should be shared to deal with the challenges around Local Government Reorganisation.  In response, the Director stated that it was necessary to give assurance that all services were safe and legal.  Arrangements were in place to cover all ten local authorities across Leicester, Leicestershire and Rutland and assurance was given that there was robustness in the system to manage unknown risks.

RESOLVED:

That the report be noted.

The Committee considered a joint report of the Director of Corporate Resources and the Assistant Director of Law and Governance which presented details on the operation of the Contract Procedure Rules between 1 April 2025 and 31 March 2026.  A copy of the report marked ‘Agenda Item 18’ is filed with these minutes.

Arising from the discussion, the following points were raised:

i)               It was considered positive that the number of approved exceptions had reduced.  However, a member queried why there had been an increase in the number of approved contract extensions/modifications.  The Director of Corporate Resources stated that extensions were dependent on individual contracts and took into account the full contract value.  It was also noted that the figure was not necessarily fully reflective as those contracts which had been modified were of a higher value.  Assurance was given that all modifications and extensions to contracts were scrutinised, and it was anticipated that the number would increase further as a result of Local Government Reorganisation.  Consideration was being given to introducing clauses in contracts to allow for break points.

ii)              A member questioned whether clawbacks were available should a provider not be performing well.  The Director stated that all contracts contained Key Performance Indicators and specific elements that needed to be complied with.  Mechanisms were in place to manage performance and for any contracts that were valued over £5m, the performance was published.

RESOLVED:

That the report on the operation of the Contract Procedure Rules between 1 April 2025 and 31 March 2026 be noted.

The Committee considered a joint report of the Assistant Director of Law and Governance and the Director of Corporate Resources which presented the revised Terms of Reference for the Corporate Governance Committee.  A copy of the report marked ‘Agenda Item 19’ is filed with these minutes.

RESOLVED:

That the revised Terms of Reference be approved.

The Committee considered a joint report of the Director of Corporate Resources and the Assistant Director of Law and Governance which presented the draft annual report of the Corporate Governance Committee for 2025/26, prior to its submission to Full Council in September.  A copy of the report marked ‘Agenda Item 20’ is filed with these minutes.

RESOLVED:

That the draft annual report of the Corporate Governance Committee 2025/26 be approved for submission to Full Council in September 2026.

The next meeting of the Corporate Governance Committee will be held on Friday 18 September 2026 at 10am.

RESOLVED:

That the next meeting of the Committee be held on Friday 18 September 2026 at 10.00am.