The Corporate Overview and Scrutiny Committee met on Tuesday 28 July 2026 to discuss the ongoing Local Government Reorganisation (LGR) process, review the council's financial outturn for the 2025/26 financial year, and examine the integrated performance report for the first quarter of 2026/27. The committee also reviewed the council's treasury management activities for the year ending 31 March 2026, considered a review of representation on outside bodies, and discussed the committee's work programme.

Local Government Reform

The committee received an update on the Local Government Reorganisation (LGR) process, a government-mandated initiative to replace the current two-tier system in Staffordshire and Stoke-on-Trent with unitary authorities. The government has confirmed its decision for a north and south mid-Staffordshire geography. While the council had initially proposed an east-west split, the focus is now on constructive work to support the implementation of the government's decision. Officers outlined the journey to date, the proposals submitted, upcoming milestones, and the preparatory work underway. It was emphasised that there would be no immediate change to day-to-day council services for residents and businesses. The next phase will involve agreeing joint working agreements, establishing voluntary joint committees, and setting up an implementation team. The Structural Change Order, the government's legal instruction to create the new councils, is anticipated to be published in autumn 2026.

During the discussion, Councillor Eagleton raised concerns about judicial reviews initiated by other councils and questioned whether Staffordshire should launch its own against the statutory change order. Councillor Martin Murray, Leader of the Council, explained that Staffordshire's proposed unitary model fell within the government's original guidance, limiting the grounds for a judicial review, unlike other areas that had not complied with the government's own decision-making criteria. Councillor Alex Farrell, Deputy Leader of the Opposition and Shadow Portfolio Holder for Local Government Reorganisation and Devolution, questioned the feasibility of meeting the tight timescales and the potential resource implications. Councillor Philip White, Leader of the Opposition, echoed concerns about the timescales and the potential for stagnation, while also highlighting the importance of devolution and expressing disappointment that no announcements had been made on this front. Councillor Ian Cooper expressed concerns about the lack of a democratic mandate for LGR from the people of Staffordshire and the potential real-world consequences for local services and jobs.

The committee was assured that significant preparatory work had already been undertaken, and that a joint programme management office was coordinating efforts across all ten local authorities. The importance of voluntary joint committees was stressed as a way to ensure cross-party working and establish a strong foundation for the new authorities. Regarding resources, officers acknowledged the challenging pace and the need to manage resources carefully, with work already underway to assess resourcing implications across the council.

Final Financial Outturn 2025/26

The committee reviewed the final financial outturn report for the 2025/26 financial year, which showed an underspend of £6.696 million against a balanced budget. Councillor Sean Bagguley, Cabinet Member for Finance and Resources, highlighted that this underspend was achieved despite rising costs for fuel, materials, and wages. The report detailed significant expenditure on adult social care (£330 million), services for vulnerable children and families (£223 million), and investments in highways (£74 million) and schools (£29 million).

Councillor Alex Farrell questioned the nature of the underspend, asking how much was due to genuine, sustainable savings versus one-off benefits or the use of reserves. Officers clarified that while some savings were recurrent, the underspend relied heavily on reserves, particularly within health and care and children's and families services. A planned use of reserves for health and care is set to reduce to zero over the Medium-Term Financial Strategy (MTFS) period. However, an underlying overspend of approximately £4.5 million in children's placements was noted as continuing into the current financial year, with a financial recovery plan in place. Councillor Philip White sought clarification on whether the £6.696 million was a saving or an underspend, and officers explained the distinction, noting a change in terminology to ensure clarity moving forward. Councillor White also raised concerns about the overspend in children's and families services, identifying it as a potential long-term structural issue.

The report also detailed the creation of a new earmarked reserve to support future Local Government Reorganisation (LGR) spend, funded by savings from the workforce efficiency review and an LGR grant. Concerns were raised about the overall cost of LGR and the potential for councils to engage in fire sales of assets before the reorganisation.

Integrated Performance Report – Quarter 1, 2026-27

The committee examined the Integrated Performance Report for the first quarter of 2026-27, which presented a generally positive picture. Councillor Martin Murray, Leader of the Council, highlighted that 32 out of 39 delivery projects were on track, with progress being made across all priority areas, including expanding inclusive education, delivering health checks, strengthening skills and business support, and improving digital transport connectivity. Customer satisfaction remained high at 90%.

However, the report also identified ongoing challenges, particularly within children's social care and SEND services, where rising demand was placing pressure on capacity and finances. Councillor Sean Bagguley, Cabinet Member for Finance and Resources, reported a revenue forecast overspend of £19.8 million (2.48% of net expenditure), almost entirely attributable to children and family services, specifically the increasing number and costs of residential placements for children in care and pressures within family safeguarding. Mitigating actions were being implemented within children and families services.

Councillor Alex Farrell raised concerns about connectivity in rural areas of Staffordshire, citing instances of zero phone signal. Councillor Bagguley acknowledged that while direct control over phone signal is limited, the council is actively pushing for improvements through fibre links and exploring satellite links. Councillor Philip White inquired about the workforce efficiency item marked in red within the delivery table. Officers explained this was due to a slipped milestone for a paper due to Cabinet, which has since been addressed. The report also highlighted strong performance in highways, with a significant number of potholes repaired, and praised the work of highway teams.

Discussions also touched upon the quality of highway repairs and the potential need for more resource in community highway teams. Councillor White proposed that strategic reviews be grouped together in future reports to improve clarity and focus on outcomes rather than just activity. The challenges with the social care management system, marked as amber due to delays in data migration and testing, were also discussed, with assurances given that the project was on target for handover to the new authorities.

A significant portion of the discussion focused on the overspend in children's services, with Councillor White and Councillor Ian Cooper expressing concern about the underlying causes and the long-term financial implications. Officers explained that the increase in children in care was partly due to a change in the front-dooring policy, which had led to a sudden spike in numbers, a trend also seen nationally.

Treasury Management Report for the year ended 31 March 2026

The committee reviewed the Treasury Management Report for the year ending 31 March 2026. Councillor Sean Bagguley, Cabinet Member for Finance and Resources, presented the report, highlighting the council's prudent and low-risk approach to treasury management, focusing on the security and liquidity of funds. The council repaid £30.5 million of external loans and avoided additional interest payments by using cash reserves. The council achieved an investment return of 4.29%, exceeding the agreed benchmark of 3.52%.

Councillor Philip White commended the finance team's sensible approach and inquired if this prudent strategy would continue. Councillor Bagguley confirmed that the council would continue to manage its treasury activities in the same way. Councillor Ian Cooper also praised the report, emphasising the responsibility of managing public money wisely. He noted the current high returns on 10-year bonds and the need to monitor the financial management of the government.

The report detailed the council's borrowing and investment activities, noting that the council had used internal cash balances to fund its borrowing needs, avoiding additional interest payments. The report also outlined the council's approved lending list, which prioritised low-risk institutions and diversified investments.

Review of Representation on Outside Bodies

The committee considered a review of the council's representation on outside bodies, aimed at ensuring that these appointments remain relevant, effective, and deliver value for money. Councillor Martin Murray, Leader of the Council, explained that the review proposed removing 14 bodies from the list due to them no longer operating, not requiring a county councillor representative, or having had no contact. Councillor Ian Cooper supported the idea of removing inactive bodies to save theoretical costs, while Councillor Craig Humphreyson sought clarification on the removal of the Sir Graham Balfour High School Joint Youth Sports Facilities Management Liaison Group. Officers confirmed that all members appointed to outside bodies had been contacted as part of the review process. Councillor Farrell and Councillor Humphreyson raised specific concerns about liaison committees for quarries and a lane group, respectively, where they had received no contact. Officers agreed to follow up on these specific cases offline. Councillor Philip White described the exercise as sensible housekeeping and sought assurance that all members would be contacted regarding any changes.

The committee was asked to consider the list of bodies recommended for removal and those recommended for continued representation.

Work Programme

The committee received an update on its work programme. Key additions included the Enterprise Resource Planning (ERP) system implementation, scheduled for the 15 December meeting. The Medium-Term Financial Strategy (MTFS) working group membership was formally appointed, including Councillors Baker, Humphreyson, White, Machin, Griffiths, Orlandi-Fantini, Clissett, and Luca. A briefing paper on the risk register was agreed to be sent to the committee. The committee also noted that the Artificial Intelligence (AI) business case has been added to the 8 September meeting agenda. The committee also agreed that the outcomes of strategic reviews should be sent to them for review, and that improvements to the performance report format would be considered.

The committee agreed to the recommendations to note the update on Local Government Reorganisation, and to receive further updates on the Structural Change Order when it is published. They also agreed to note the final financial outturn report for 2025/26, and to note and challenge performance in the Integrated Performance Report, advising of any further information or action required. Finally, the committee agreed to note and challenge treasury management activities and advise of any further information or action required. They also agreed to consider the list of outside bodies recommended for removal and continued representation.