Surrey residents 'getting value for money' from County Council according to audit

An external auditor says Surrey residents are getting value for money from their county council – except for in children’s services.

The independent team from Grant Thornton told the council they had to figure out how to cut demand for special educational needs transport, which far exceeds other council areas.

They also raised concerns about the council’s ability to repay its loans in the expected economic climate ahead.

But Surrey County Council (SCC) has, on the whole, managed to turn its finances around, when previously for three years it had been spending more money than it was bringing in and had to dip into its reserves to balance the books.

It has done this by making a whopping £72 million worth of efficiencies in one year. This was not far off its target of £82m, but it did mean some projects had to be delayed.

The audit report on the financial year 2019-2020 said: “Given the overall scale of savings to be delivered, this reflects effective management and delivery of savings plans.”

In order to balance the budget, some services had to make sacrifices to accommodate a £2.7 million net overspend in children, families, lifelong learning and culture. This department spent 28% (£527 million) of the council’s total revenue budget.

This was mainly down to a higher than expected demand for children’s transport services, particularly children with SEND (special educational needs and disability).

In addition, a shortage of SEND places in Surrey state schools meant an increasing number of children had to be found independent placements, which exceeded funding available from the government grant given for schools.

This meant the council carried forward a liability of £30 million. There is a risk it may have to cover this by finding money from elsewhere.

The auditors told SCC they had to “consider ways to mitigate demand in SEN transport”.

Why are SEND transport costs so high and what is the council doing to bring them down?

An internal review of SCC’s school transport policy at the end of last year, under children’s services director Dave Hill, showed “poor practice and culture driving poor outcomes for children and young people in Surrey and high costs”.

It found Surrey had one of the highest school transport budgets in the country. It was spending between two-and-a-half and three times more on SEND transport for children aged up to 17 than its counterparts in Hertfordshire and Essex.

Each year £33.3 million was spent on transporting children with SEND to school, and all of it came from local tax – that was 5% of all council tax raised in the year.

As a result, the cabinet member for all-age learning, Julie Iles, approved Mr Hill’s recommendations to stop providing free transport to some children where it was not obliged to by law – for under-fives and over-16s.

And a new transport policy from September 2020 is promoting independence by encouraging walking and cycling or using minibus collection points. Cllr Iles said many young people had been in taxis from the age of five and they wanted to make sure that when their time at school ended, they could travel independently.

Cllr Iles said: “The auditors’ report speaks to the financial statement of 2019/20 and SCC have, since then, introduced a transport policy which will foster greater independence for our young people.

“Most of them will not have support from social care as they move into adulthood, so being able to travel independently is part of that preparation for life.

“I had a parent last year who was adamant that his child could not cycle to college. His son decided however that he was going to do it, and they’ve never looked back.”

She said sometimes they still needed to use taxis however, “for medical reasons and sometimes by reason of their social interactions”.

The council is still spending £31m a year on SEND school travel, though plans to reduce this also include creating 213 extra specialist school places within the county next year. This will not only prevent long-distance journeys to outside the county, but will also prevent them having to use placements at independent schools, which are over three times more expensive.

Cllr Iles added: “By investing in specialist places across the county we will be able to educate more of our special needs pupils closer to home and avoid lengthy journeys – it’s better for them and better for the environment and speaks to our Surrey Vision 2030 of no one left behind.”

The audit team concluded: “Based on the work we performed to address the significant risks, we are satisfied that, except for the matter we identified in respect of children’s services, the council had proper arrangements for securing economy, efficiency and effectiveness in its use of resources.”

Council leader Tim Oliver and chief executive Joanna Killian said: “This financial year has seen an ambitious step change in the financial management and resilience of the council.”

How are things looking for the future?

Auditors gave the council a warning on the impact of coronavirus.

£38m of savings and efficiencies were identified for the 2020-2021 budget, which is about half of what was made in the year before.

This was seen as achievable when approved in February, but it now needs to be revised to take into account the council potentially receiving less business rates income and having to pay out more for council tax support.

Auditors said the council should review its policy on minimum revenue provision – that is how much of their borrowing debt needs to be paid off each year – which was lower than suggested by statutory guidance.

They said: “An added degree of uncertainty surrounding repayments exists in the current economic climate so the policy is risky.

“Concern could be raised as to the council’s ability to refinance or repay its related £234 million loans mainly to the central government’s Public Works Loans Board when they mature – predominantly in the period 2050 to 2065.”

The council said it was confident it was able to re-finance them, pointing out its Hasley Garton investment properties were worth around £269 million – that is £35 million more than their debt.

However, these properties fell in value by £27m in the financial year ending March 2020.

Ciaran McLaughlin, key audit partner for Grant Thornton UK LLP, said: “While we believe the minimum revenue provision policy to be imprudent, we’re satisfied that it’s not unlawful.”

He said SCC should monitor the value of its properties to make sure they did not fall below its level of outstanding debt.