LGA Corporate Peer Challenge – Progress Review: Somerset Council

The council undertook an LGA Corporate Peer Challenge (CPC) during November 2024 and promptly published the full report with an action plan. 

The Progress Review is an integral part of the Corporate Peer Challenge process.  Taking place approximately ten months after the CPC, it is designed to provide space for the council’s senior leadership to:

• receive feedback from peers on the early progress made by the council against the CPC recommendations. 
• consider peers’ reflections on any new opportunities or challenges that may have arisen since the peer team were ‘on-site’ including any further support needs
• discuss any early impact or learning from the progress made to date 

The LGA would like to thank Somerset Council for their commitment to sector led improvement. This Progress Review was the next step in an ongoing, open and close relationship that the council has with LGA sector support.

The Progress Review at Somerset Council took place (onsite) between 24 and 25 November 2025. 

The Progress Review focussed on each of the recommendations from the Corporate Peer Challenge, under the following theme headings: 

• Values, Behaviours and Culture
• Finance and Financial Sustainability
• Transformation
• Governance and Scrutiny
• Leadership, Members and Organisational Capacity
• Development of Place

For this Progress Review, the following members of the original CPC team were involved: 

• Councillor Gareth Roberts – Leader, LB Richmond Council
• Councillor Richard Clewer – Leader of the Opposition
• Gavin Jones – Best Value Commissioner, Lead Officer Peer
• Denise Murray – Best Value Commissioner, Slough Borough Council – Senior Finance Officer Peer
• Emily McGuinness – LGA Peer Challenge Manager

Somerset Council has made tangible progress since the original Peer Challenge, particularly in stabilising its financial position and beginning to address structural and organisational issues. Difficult decisions have been taken in relation to staffing and savings, and the organisation has undergone a significant restructure. While further refinements are likely to be required, particularly in some corporate functions, these actions demonstrate a clear and continuing commitment to addressing the financial and operational challenges facing the council.

Many of the recommendations from the original Peer Challenge are now being addressed by the council with some already embedded and others progressing. The next phase of improvement will require sustained focus on financial grip alongside a more ambitious pace of transformation to ensure the council achieves its aims of being fit for purpose, delivering value for money across all services, and realising its political ambitions for the residents of Somerset.

The peer team noted that a particular area for further development is the articulation of a strong and compelling political vision. While elements of this are present in current plans, it is not yet sufficiently clear in providing a strong sense of common purpose for the organisation. Greater, and more explicit, clarity around priorities such as housing and economic growth would provide a stronger framework to guide decision‑making, transformation activity and resource allocation.

Purposeful leadership remains critical to delivering the scale of change required. The council has rightly identified the need for cultural change, and the peer team would reiterate the need for this to be driven by clear, consistent and authentic leadership. From the staff the peer team spoke with, there is a continuing perception of change being ‘done to’ rather than ‘done with’ staff, and inconsistent messaging about the council’s financial position is leading to a confused narrative around the need to maintain pace and focus.

Since the Corporate Peer Challenge, the council has clearly recognised and acted upon the recommendations made in relation to the senior leadership team and the importance of them operating as a cohesive unit. Continued focus on senior leadership development, visible collective leadership (for example through consistent and distributed presence at staff briefings), and shared ownership of key corporate agendas across all senior leaders will be essential in continuing to rebuild trust and confidence.

The forthcoming pay and grading review presents both an opportunity and a risk. If handled well, it can demonstrate strong corporate leadership and fairness; if not, it risks exacerbating division. Clear, honest communication with staff and collective ownership across the Executive Leadership Team will be vital to its success as will a realistic grasp of the potential financial implications.

The commencement of business planning for 2026/27 is a positive step, particularly given the continuing challenging context facing the council. This will, however, test the organisation’s ability to work collaboratively across directorates as a fully articulated political vision remains under development. Strong corporate negotiation and prioritisation at senior level will be necessary to avoid unhelpful competition for scarce resources with an emphasis on the ELT acting in the interests of the council as whole rather than any individual service area.

The decision to secure external strategic support to shape and structure the council’s transformation programme is welcomed. To maximise its impact, the council will need to clearly frame transformation as improving outcomes and service quality for residents while delivering best value, rather than being perceived primarily as a mechanism for further job reductions.

Clear distinction should be maintained between:

• Service‑level improvement and optimisation, which should remain part of business‑as‑usual across all directorates; and
• A focused corporate transformation programme, comprising a small number (no more than five or six) of high‑impact programmes that require corporate capacity and investment to deliver significant savings and service change.

To support this, the development of a robust Target Operating Model (TOM) will be essential, setting out the core design principles that all major change programmes must adhere to—such as locality working, integration with partners, and digital‑by‑default approaches. Establishing a Design Authority to enforce these principles will help ensure coherence and pace across the programme.

Finally, governance will need to be streamlined to enable quicker decision‑making. There is currently a risk that excessive meetings and the layers of oversight initially adopted to provide the levels of rigour needed at a specific point in time are now slowing progress. Clear delegations, proportionate governance and a stronger focus on outcomes over process will be necessary to deliver improvement at the required pace.

Somerset Council has continued to make progress against the recommendations of the original Peer Challenge, operating in an exceptionally challenging financial and organisational context. The council has demonstrated commitment, resilience and a willingness to take difficult decisions, most notably through the completion of a wide‑ranging workforce review, strengthened financial controls, and early steps towards a more disciplined transformation programme.

There is now an emerging platform on which to build. However, the scale of the remaining financial challenge, the need for greater strategic clarity, and the impact of sustained change on staff morale mean that pace, coherence and leadership alignment will be critical in the continuing improvement journey.

The council has begun to introduce an organisation‑wide approach to staff engagement, with early evidence that supporting processes are being put in place. This represents a positive step, although implementation remains at an early stage and consistency across the organisation has yet to be fully achieved.

Whilst there have been improvements in trust and morale, there is more to do to. While staff recognise the necessity of recent workforce changes, there is evidence of change fatigue, uncertainty and concern about further reforms, particularly in relation to pay and grading. Rebuilding trust will require a clear, honest and consistent narrative that connects organisational values, financial reality and the future direction of the council.

Transformation currently carries negative connotations for some staff, often associated with job losses rather than service improvement. Reframing transformation around mission, purpose and improved outcomes for residents will be essential in restoring confidence and engagement.

The council has taken significant steps to stabilise its immediate financial position. Following in‑principle government approval of Exceptional Financial Support (EFS), the council successfully set a legally balanced 2025/26 budget, enabling it to meet its statutory obligations and continue delivering essential services.

However, the Medium-Term Financial Strategy remains extremely challenging. The projected budget gap is £90m in 2026/27, rising to £207m by 2030/31. While identified savings and opportunities could materially reduce the short‑term gap, significant residual risk remains, compounded by low general reserves, DSG pressures, commercial risk from council‑owned entities, and uncertainty around future government funding.

The original Corporate Peer Challenge made a number of specific recommendations in relation to financial sustainability which are outlined below along with the peer team’s comments following the Progress Review.

Recommendation: Fully complete the discovery phase, identify and quantify any further financial risk, report findings and develop mitigations

The council has taken action to progress this recommendation, most notably through the proposals currently under consideration to establish a Shareholder Committee which the peer team recognise as a significant and positive step. However, the peer team are of the view that there remain insufficient governance, business planning, and financial reporting measure in place regarding council owned subsidiary companies, Joint Ventures (JV’s) and non-treasury third party investments, which can lead to financial and commercial risks and that there is a need for members to better define their strategy and risk appetite and provide regular oversight to protect the council as shareholder / investor.

In contemplating the approach to be adopted i.e. the Shareholder Committee, the council should ensure they fully understand and can demonstrate their management of the risks, transparency in reporting and accountability in decision making.

Recommendation: Develop a two-pronged approach: (1) a realistic and achievable 25/26 budget based on available resources; (2) a medium-term forecast leading to a balanced and sustainable MTFS without exceptional financial support

Following the government's ‘in-principle’ approval of exceptional financial support (EFS) (£63m capitalisation direction, including £20m carried forward transformation funding) and a 2.5 per cent council tax increase (providing £9.1m above the standard cap), the council successfully set its 2025/26 budget. This allowed the council to meet all financial obligations and continue delivering essential services.

Despite evident in-year service pressures that require future mitigation, the latest forecasts indicate a net underspend for the General Fund revenue and Transformation Budgets, primarily due to corporate budget management. Conversely, a significant increase in year-end deficits is projected within the Dedicated School Grant. 

The MTFS identifies a budget gap of £90m in 2026/27, escalating to £207m by 2030/31. The 2026/27 deficit requires immediate action through tactical, and evidence led transformational savings to realise projected benefits.

Identified savings and opportunities may reduce the 2026/27 gap to approximately £30m–£40m. The residual gap needs to be considered in the context of broader risk such as, low general reserves, changes in local government funding formula, commercial risks from council-owned entities and investments, and increasing Dedicated School Grant deficits.

While many in the Executive and Leadership team understand the immediate challenge, there is not yet universal understanding among all members and staff regarding the long-term budget gaps and the scale and urgency of the actions still required to achieve financial sustainability.

Future requests for EFS are anticipated. Before requesting EFS, the council must rigorously demonstrate it is operating cost-effective, value for money services, exhausted all local options and taking the difficult decisions needed over the short and medium-term, to get the council and its finances back on track.

Consideration could include enhanced scrutiny of growth requests, increase service efficiencies and reductions, increased fees and charges, affordable harmonisation of pay and reduced use of market supplements, reduced discretionary reliefs, rationalisation of the operational estate, and limiting capital expenditure financed via borrowing.

Recommendation: Consider the appropriate timing to lift certain emergency internal control measures to empower staff and demonstrate trust

In lifting specific emergency internal control measures to empower staff and foster a culture of trust, observations suggest inconsistent messaging regarding financial controls and operational imperatives. Some senior leaders are advocating for empowerment of staff, enhanced delegations and pace, contrasting with mixed communication, increased sign-off processes and perception that it’s difficult to get things done. 

Clear communication and well-defined processes are crucial for effective governance and to ensure essential governance is not mistaken for unnecessary bureaucracy. It is also vital that transparent, role-based delegations are properly documented and implemented.

Recommendation: Revisit the evaluation methodology for divestment and asset disposal to ensure wider financial implications are fully integrated and visible to decision-makers

The evaluation methodology has been reviewed and improvement is visible in the quality of the supporting information relating to commercial divestments being presented to the Property & Investment sub-committee. This provides a framework to ensure council decisions regarding asset disposal are based on a structured, informed and evidence-based approach, which is transparent about strategic alignment, financial, and community impact.

Recommendation: Produce a refreshed DSG deficit recovery plan, co-produced with the schools forum and stakeholders, showing sustainable provision and long-term deficit reduction

The Council has updated its Deficit Management Plan (DMP), which was approved in September 2025. The deficit, after mitigation efforts, is projected at £106m (Q2) and forecasted to rise to between £129m - £184m, contingent on the successful delivery of the DMP. These projected deficits surpass the Council's available financial reserves.

The government intends to absorb future costs from 2028/29. However, the specific mechanisms for this are undefined (e.g., redesigned funding structures, new incentives, or service delivery changes). Crucially, a definitive plan for addressing the existing, accumulated deficits has not yet been published.

It is important the council persist in identifying more efficient and effective ways to provide support and align Corporate Programme Management Office (PMO) resource for the programme to maintain delivery, stay on schedule, and minimise associated risks.

Recommendation: Produce a refreshed 30-year HRA business plan with clear priorities, funding sources, affordability metrics and annual sustainability assessment

The council has refreshed its HRA budget and 30-year plan as part of the annual budget setting process, however, there remains more to do. The HRA following reorganisation continues to lack the coherence of a housing strategy with a golden thread which ensures strategic alignment of the service, developed following consultation with partners, stakeholders and tenants. The annual position on the face appears healthy and balanced, however in delivering the aspirations outlined, embedded affordability thresholds are, in the view of the peer team, set too low, and despite this debt levels unaffordable. 

The council commissioned a social housing consultant to test the projections in the Business Plan which has been beneficial in providing transparency and in identifying that  “the council takes a long-term view when making short and medium-term decisions about the HRA”  and “the council needs to consider options to safeguard the long-term financial sustainability of its HRA and to provide financial capacity for capital investment”.

To deliver an HRA that is and remains financially sustainable over the long term requires investments re-prioritised in line with the developing Housing strategy, reducing costs base and increase income (from a range of potential sources) to ensure it has a viable programme, short, medium and long-term, and resilience to economic shocks and emergent risks. 

Recommendation: Strengthen the annual procurement forward plan, linking strategies to approved programmes, and improve compliance, commissioning and contract management

The procurement framework has been strengthened with refreshed procedure rules, the establishment of a Procurement Challenge Board, enhancement of the procurement forward plan, procurement training (73 per cent take up), internal compliance reporting and effective management action resulting in increased compliance regarding breachers and waivers. 

The Procurement Act 2023 requires greater transparency and publishing a forward-looking pipeline of activity enables Cabinet to have proper oversight of planned procurement activities, performance and compliance and help to open the procurement to Micro, SMEs and VCSEs. Providing them with time to plan for future work and collaborate with partners on delivery solutions.

Greater rigor and similar focus could now be applied to retrospective purchase orders with the enforcement of No PO No Pay principles, driving greater value through the commissioning and contract management lifecycle and third party spend.

Recommendation: Refresh the reserves policy and risk assessment methodology to reflect local circumstances and support medium- and long-term priorities and risks

The forecasted level of general and unrestricted earmarked reserves is £166m – £186m (MTFP) and may be lower than ideal for a council of this size and complexity.

A clear reserve strategy remains crucial in providing a planned framework for managing financial risks, ensuring the council’s stability and resilience in the face of unexpected events or economic volatility. It acts as a safety net and a tool for long-term planning, noting that the council should not hold significant balances above those required. 

Recommendation: Plan for a medium-term, appropriately resourced transformation fund to deliver whole-council transformation

It is a positive that a Strategic Transformation partner has now been appointed. A fully formed Transformation programme that is a practical translation of the long-term vision of reform (what are the council changing and why) and seeks to deliver improved outcomes within a sustainable financial envelope remains in its infancy but is gaining momentum.  The development of a credible plan integrating delivery investment and benefits within a balanced MTFP is fundamental to the Council’s financial sustainability and must be a key priority.

Recommendation: Develop a more robust, evidence-based approach to priority-setting supported by integrated business, financial and service planning

The peer team noted that positive progress that has been made in implementing enhanced Business Planning arrangements ready to be used from April 2026. The evident progress included a more structured approach, cross-functional collaboration, and the prioritisation of data integration to build a common evidence base of management information. Furthermore, regular reporting to members aligns finance, performance, and risk. The new performance and risk frameworks, supported by developing prioritisation framework will provide transparency, strengthen the foundation for future integration and guide decision-making.

Recommendation: Establish a programme and action plan for pay and grading harmonisation with transparency and acknowledgement of financial implications

Consultants have now been engaged, and work is progressing to establish a pay and grading harmonisation. In addition to complying with all legal requirements, the pay system must be affordable and align with the council's wider corporate and financial plans to ensure sustainability and future resilience.  The peer team have made observations about the wider implications of this review elsewhere in this report.

Recommendation: Capture recommendations and agreed management actions from audits and external reviews, with governance arrangements to track timely implementation

The council’s performance management framework has a clearly articulated priority -  “An Effective, Efficient & Sustainable Council” which incorporates Organisational Health measures and contains assessments of priority improvement actions resulting from audits and external reviews. Using Ideagen, the Council’s Performance and Risk Management System, a streamlined approach has been developed for tracking, monitoring and reporting on action plans, and summary directorate dashboards are routinely produced for high level overview. This is welcomed in bringing together priorities, performance and improvement actions into one place and evidencing, managing and reporting progress, to Executive, leadership team and members (inc Scrutiny).

Governance arrangements are strengthening, with improved performance, risk and assurance frameworks beginning to align. The use of an integrated system to track audit recommendations and peer review actions is welcomed.

Scrutiny reform is moving in the right direction, with an external review completed and an agreed implementation plan in place. Delivery at pace will be critical if scrutiny is to become a more effective contributor to improved decision‑making.

It is positive to note that Audit Committee training has commenced, although members expressed a desire for more continuous, targeted development, particularly in complex areas such as treasury management, company governance and emerging risks.

Member engagement and development has improved, with increased briefings and opportunities for involvement. However, there remains some disconnect between political priorities and operational focus, particularly around the relative emphasis placed on climate resilience versus the immediate financial and transformation challenges.

Senior officer leadership is pivotal. Expectations of the Executive Leadership Team are high given the relatively small size of the team, but clarity is needed on the rhythm, accountability and collective ownership required to drive the organisation forward at greater pace. Concerns remain about the burden of organisational process and subsequent slow decision‑making becoming normalised behaviours and this must be addressed.

The peer team continue to advocate for statutory officers to be fully embedded in strategic discussions to ensure the effective operation of the “golden triangle” of governance, finance and legality.

There is strong delivery on major economic projects, and a new strategy is emerging. However, growth above and beyond large strategic sites remains underdeveloped, particularly for rural and market town economies.

If economic growth is to be positioned as central to long‑term financial sustainability, the council will need a clearer, more coherent approach that integrates housing delivery, regeneration, place‑based leadership and community development across the whole county.

The Peer Team noted that there has been an initial external review of the Local Community Networks. Partners continue to express some concern over the lack of strategic focus and consistency across the LCN’s.

The council is moving in the right direction and has taken several necessary and commendable steps under extremely difficult circumstances. Most peer challenge recommendations are being actively addressed, though as to be expected given the time frames involved, some are not yet fully embedded.

An overriding reflection from the peer team is that the council needs to maintain pace and focus on delivering the Transformation programme, with accelerated pace of implementation where at all possible. It is vital that members continue to show courage in taking and sustaining undoubtedly difficult decisions.

With sustained leadership focus, improved strategic clarity and alignment between members and officers, Somerset Council is well placed to translate recent efforts into lasting improvement and long‑term financial sustainability.

The LGA would like to thank Somerset Council for undertaking an LGA CPC Progress Review.

We appreciate that senior managerial and political leadership will want to reflect on these findings and suggestions in order to determine how the organisation wishes to take things forward.

Under the umbrella of LGA sector-led improvement, there is an on-going offer of support to councils. The LGA is well placed to provide additional support, advice and guidance on a number of the areas identified for development and improvement and we would be happy to discuss this.

Paul Clarke (Principal Adviser) is the main point of contact between the authority and the Local Government Association (LGA) and their e-mail address is [email protected]