Significant financial and governance weaknesses identified at Pendle Council in Grant Thornton report

Auditors Grant Thornton conducted the report, released which examined the council’s finances, amongst other areas, for 2021/22 and 2023/24 which found several serious weaknesses.

The report identified “significant weaknesses” in terms of the council’s financial sustainability for both years covered, and also found significant weaknesses in the council’s governance.

Improvement recommendations were also made in the category of improving the council’s economy, efficiency and effectiveness.

On financial sustainability, the auditors noted: “We have identified evidence of significant weaknesses within the arrangements in place. The council recognises its financial position but needs to take further action and make the necessary savings to strengthen its medium-term financial plans.”

Auditors stressed that the council should urgently prepare and agree short and medium-term plans to close its budget gap. The level of budget gap compared to the council’s reserves was described as “high” and “unsustainable”.

It also found that the council had not identified the necessary savings to bridge the gaps between future spending and income. The council has a remaining budget gap of £1m. a year from 2024/25 and will have extinguished its usable reserves by 2027 if it uses reserves instead of identifying savings.

The report also notes that two ‘Improvement Recommendations’ auditors had made for 2020/21 had not yet been implemented.

On governance, auditors found significant weaknesses around decision-making. The role of area committees and town councils in planning decisions led to decisions being made against the council’s planning policies.

The report adds: “The behaviour of some members towards each other and officers has fallen short of the standards that members have set for themselves.”

Siginificantly, the report also highlights weaknesses surrounding the council’s relationship with its joint venture companies, saying: “The governance of the council’s relationships with its joint venture companies is not sufficiently robust.”

Pendle Council has established several joint venture companies in recent years, most notably Pendle Enterprise and Regeneration Ltd (PEARL), a partnership with local company Barnfield Investment Properties.

The partnership with PEARL notably resulted in the £32m. redevelopment of the former Brierfield Mill, now known as Northlight.

A spokesman for Pendle Council said: “Similar to many other local authorities, Pendle Borough Council is experiencing severe budget challenges having seen its central government funding reduce by 70% in real terms since 2010. However, the Council continues to seek opportunities to make efficiencies and generate savings.

“Within the boundaries of its budget, Pendle Borough Council is working hard to address the issues highlighted in the external auditor’s annual report for 203/24.

“The council commissioned an independent legal adviser to review the relationships and governance of its joint venture companies. This was an in-depth piece of work, with some improvements having already been made and the final workshop with elected members due to take place in May.

“In response to planning decisions, a legal report has been commissioned to look at the consistency, costs and efficiency of the council’s planning process.

“The advice will feed into a review of the council’s constitution which is aimed at clarifying roles and responsibilities and will help address the Governance issues raised by the external auditor.”