The Corporate Policy Development and Scrutiny Panel met on Tuesday 22 September 2026 to discuss significant budget pressures within Children's Services, the performance of the council's commercial property portfolio, and the strategic direction for the council's future operations. Key decisions included the agreement to proceed with changes to the Local Council Tax Support Scheme to address fiscal drag, and the endorsement of a Case for Change report outlining a radical rethink of council operations to meet significant financial challenges.

Children's Services Budget Update

The panel received a detailed update on the significant overspend in Children's Services, which reached £10.2 million in the last financial year. The majority of this overspend, £8.1 million, was attributed to residential placement costs. Councillor Mark Elliott, Cabinet Member for Resources, highlighted that this was not due to an increase in the number of children in care, but rather the escalating costs charged by private providers, many of whom are backed by private equity and operate with high profit margins. The council faces a lack of bargaining power due to the concentrated nature of the market.

Two case studies were presented to illustrate the scale of these costs: a 16-year-old girl placed in a Croydon Council placement costing £900,000 per year, and two siblings with complex needs placed in a residential setting at a cost of £7,000 per week each, totalling £728,000 annually.

Officers outlined several mitigation strategies, including increased budget monitoring rigour, a weekly care and resource panel for sign-off on new packages, and the development of the Charlton House project, which aims to repurpose a former care home into a special school and children's homes to bring provision back in-house.

Councillor Toby Simon welcomed the proposal to uprate income bands in the Local Council Tax Support Scheme in line with inflation, which is expected to be cost-neutral and address fiscal drag. However, he questioned the affordability of a disregard for small monthly income increases, which was estimated to cost £64,000 annually. The panel also discussed the potential for averaging income over a three-month period to account for fluctuating incomes. The idea of a terminal illness council tax support scheme was considered, but deemed too costly at an estimated £120,000 per year, especially given the council's need to find £28 million in savings over the next three years. The decision was made to proceed with uprating the income bands, with a six-week public consultation planned to begin in October.

Councillor Jess David raised concerns about the shortage of residential places in the South West and questioned how the council could work regionally to address this. Officers explained ongoing efforts to improve working relationships with providers and the exploration of regional approaches, including the government's regional care cooperative model, although an application for this was unsuccessful.

Concerns were also raised about the quality and legality of placements, with officers confirming that the vast majority of children are placed in lawful, registered homes. Currently, three children are in unregistered placements, which are time-limited. The quality of residential care was acknowledged as variable, with Ofsted judgments being a key indicator. The rebuilding of residential social work as a profession was also discussed.

Councillor Colin Blackburn expressed frustration that the system is broken and questioned government action on profiteering in the sector. Officers referred to the Children's Wellbeing and Schools Act, which includes a monitoring function for Ofsted, but noted the absence of specific legislation on windfall taxes or caps on profits.

Councillor Kevin Heathcote inquired about the total cost of the 32 children currently in residential care, which was stated as £6.3 million (though later clarified as a budgeted figure, with a forecast spend exceeding £13 million). He also asked about the number of foster carers and any increase over the last five years, and the difference in pay and availability for local children versus unaccompanied asylum-seeking children. Officers confirmed that foster carers are paid the same for all children and that there are no unaccompanied asylum-seeking children waiting for foster care.

Commercial Property Update

The panel received an update on the commercial estate, which comprises 245 properties generating a headline rent of £15.58 million. Councillor Mark Elliott, Cabinet Member for Resources, highlighted the estate's resilience, with 99.5% of properties meeting minimum energy efficiency standards. Voids have decreased from 47 in 2022 to 38. The report detailed a shift in funding arrangements from service-supported borrowing to corporate-supported borrowing with sinking funds to manage major works. A constraint was noted where Public Works Loan Board borrowing rules no longer permit investment in property solely for income generation.

Councillor Colin Blackburn raised questions about revenue uplifts from South Quays and the timing of rental income from Morley's. Officers explained that Morley's income is factored into forecasts for 2028/29 and that projections include smoothed rent-free periods and lease end assumptions. Concerns were also raised about the number of vacant properties awaiting works and the benchmarking of performance against other landlords. Feedback from agents suggests the estate is highly sought after, and the council has navigated the post-COVID market better than some institutions.

Discussions also touched upon the lease buy-back from M&S, with the Cabinet Member expressing confidence in the deal despite a lack of public detail due to commercial sensitivity. The panel also sought clarification on 23 reversionary properties, where leases are due to return to the council after long terms, often granted due to bomb damage.

Councillor Toby Simon inquired about the management of residential properties above shops and efforts to maximise their availability. Officers explained that these are managed by Curo or are part of right-to-buy agreements, with opportunities to release upper floors being explored for housing or private sale.

Case for Change

The panel was presented with the Case for Change report, which outlines a strategic approach to address the council's significant financial challenge of finding £28 million in savings over the next three years. Councillor Mark Elliott emphasised the need for a radical rethink of council operations to ensure financial sustainability and maintain ambition in areas such as climate change and addressing inequalities.

The report proposes a transformation programme focused on becoming a more relational, preventative, neighbourhood-based, and digitally enabled council. Key workstreams include: prevention and early intervention, optimising the operational estate, improving productivity through AI and automation, redesigning transport services, relational commissioning and procurement, enabling neighbourhoods and devolution, and developing new income streams. The aim is to deliver £12 million in benefits over the MTFS period.

Panel members discussed the potential for bringing more services back in-house, with the Cabinet Member confirming this would be considered, particularly where the market is failing. The report also touched upon working differently with parishes, with officers indicating that discussions would be held to explore potential partnerships.

Councillor Simon McCombe raised questions about the implications of working with parishes, and Councillor Gavin Heathcote suggested providing capacity support to parishes to enable them to take on more responsibilities. Councillor Robin Moss declared himself a parish clerk and noted concerns about differential taxation in North East Somerset. Councillor Jess David asked about the strategy for Charlton House and whether it would be in-housed.

The panel agreed to move their November meeting to the 10th to allow for scrutiny of financial figures before they go to Cabinet.

Panel Workplan

The panel noted its future workplan, with items including updates on Aequus, the Commercial Estate, Children's Services finances, the Being Our Best programme, and the Corporate Strategy.