Leicester City Council (Finance) – Progress Review

The council undertook an LGA Finance Peer Challenge during 29-31 October 2024 and published the full report with an action plan. 

The Progress Review is an integral part of the Finance Peer Challenge (FPC) process. Taking place approximately twelve months after the FPC, 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 FPC recommendations and the council’s RAG rated FPC Action Plan. 
• 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 Leicester City 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 Leicester City Council took place (onsite) on 5 November 2025. The Progress Review focussed on each of the recommendations from the Finance Peer Challenge. 

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

• Lead Peer: Garry Cummings (LGA Financial Improvement and Sustainability Adviser and former Deputy Chief Executive and Director of Finance, Transformation & Performance, Stockton-on-Tees Borough Council) 
• Member Peer: Councillor Nazia Rehman (Portfolio Holder for Resources, Finance and Transformation at Wigan Council) 
• Senior Officer Peer: Sara Pitt (Director of Finance & Deputy S151 Officer at Liverpool City Council) 
• Peer Challenge Manager: Satvinder Rana (Senior Regional Adviser) covering for Ernest Opuni (LGA Senior Regional Adviser).

Out of the FPC’s seven recommendations, the council’s RAG rated Action plan reports that 100 per cent of actions have been progressed.

The peer team heard that the FPC had a positive impact on the council which Members and senior officers found “really helpful” and instrumental in sharpening focus across leadership teams. The recommendations emphasised the importance of formalising its financial planning, accelerating transformation work and strengthening collaboration between finance and service areas. The peer challenge process also helped drive improvements in communication, shifting internal narratives from austerity and cuts to positive stories of transformation, innovation, and service improvement. Furthermore, it encouraged the creation of clearer governance and project management frameworks, the development of a corporate PMO and the rollout of leadership and training initiatives that are helping embed a culture of transparency, collaboration and continuous improvement, with senior officers working more closely together to deliver shared objectives.

Since the FPC in October 2024, the council has managed a demanding workload, including preparations for Local Government Reorganisation (LGR) and several inspections. Despite these pressures, the council has fully accepted and acted on the peer team’s recommendations. Progress has been made across several key areas, demonstrating a clear commitment to improvement and sound financial management.

There has been measurable progress in strengthening financial resilience and advancing transformation work to close the budget gap in the three-year financial plan. The council has maintained balanced budgets, reduced its medium-term financial gap, and advanced several transformation initiatives. However, challenges remain - particularly in co-ordinating transformation work and developing corporate oversight to ensure programmes are delivered and savings achieved. 

To prepare for future challenges, it should undertake detailed scenario planning to assess the potential risks and opportunities arising from Local Government Reorganisation (LGR) and the Fair Funding Review. This forward planning will help the council stay resilient, adaptable, and ready to respond effectively to external changes.

Recommendation 1: Although there is an emerging plan for resolving the financial position for the next 3 years, this requires formalisation and approval, with all mitigations being required. 

A formal three-year financial strategy was approved in February 2025, which ensured that the council had a managed position over the medium term. This included:

• £23m of planned savings of which £13.2m have been delivered 
• re-allocating resources approved for capital expenditure and replacing with borrowing
• the use of reserves. 

In addition, capital receipts of £6m have been realised, with a further £10m contractually committed and £30m under discussion. Cost mitigation measures have also been identified in homelessness services (£16m savings in 2025/26, rising to £40m by 2027/28), adult care (£22.5m by repackaging care for people), and children’s services (£2.4m by placing children in internal residential care rather than placing externally). 

There is clear political support for achieving these savings, and the council remains aware of the savings that transformation initiatives can deliver and the additional income that growth can generate - as well as potential opportunities from LGR. However, there have been examples of agreed savings options being revisited during the political process, such as the libraries proposals. Strengthening the sign-off process for the savings options - including ensuring delivery plans are fully worked up before approval - would help avoid this.

Furthermore, while LGR is viewed as a potential contributor to future financial sustainability, the council should continue to pursue long-term efficiencies and transformation activity irrespective of any LGR outcome. Future planning should not assume LGR as the primary route to sustainability; and in preparing for LGR, the council should continue to ensure that focus on day-to-day service delivery remains strong and that operational stability is maintained alongside the wider transformation agenda.

Looking forward, the council will need to continually review the plan for inflation, growth etc. and ensure continued links between the capital programme and the three-year financial strategy to reflect asset sales and impact on borrowing levels.

Recommendation 2: The plan for the next three years does not resolve the inherent gap of £60m and it is recommended that the council develop plans, including a corporate transformation programme.

The underlying structural gap has reduced from £68m and the latest position subject to ongoing work is below £36m by 2027/28, partly due to the potential impact of the Fair Funding Review. This is expected to be reduced further by the continuation and development of the transformation programme. 

Digital transformation is now more systematically embedded through the DDaT (Digital, Data and Technology) Transformation Programme, which aims to deliver a new corporate website and customer contact centre (going live in January 2026), migration to cloud-based systems (Netcall Converse CX), and AI-driven service automation. Governance arrangements are now in place through the DDaT Gateway and the Programme Management Office (PMO).

Transformational work has also continued in housing and social care, where improvements in outcomes are being achieved at lower cost. Much of this transformation work is data-led, which is commendable and should further reduce the inherent budget gap.

Senior officers expressed a desire for more long-term transformation programmes similar to the ‘Leading Better Lives’ initiative, to help drive sustained improvements and reinforce a long-term approach to change. The DDaT Transformation Programme should therefore be expanded into a council-wide transformation roadmap with clear milestones, accountability and benefits tracking. This roadmap should integrate financial, technological, service delivery and organisational changes to drive long-term efficiency and service improvements.

All transformational initiatives should be aligned with the three-year savings plan and contribute directly to financial sustainability. Priority should be given to high-impact, cross-council projects that have clearly defined milestones, measurable benefits and allocated resources; as well as adopting more short, focused delivery ‘sprints’ to help accelerate transformation, enable quick learning and allow unsuccessful approaches to be identified and stopped early.

The focus of the transformation programme should include demand management, service redesign, and the strategic use of digital and data technologies to optimise outcomes and reduce costs. Putting in place a standardised benefits realisation framework will help quantify cashable savings and highlight service improvements.

Recommendation 3: Establish governance and appropriate resources to deliver the transformation programme including a corporate approach and oversight (for example transformation board, Programme Management Office, clearly identified training and development requirements for this approach).

The peer team heard that improvements have been made to the governance structure of the transformation programme, with the chief operating officer now chairing the DDaT Board to coordinate transformation activity. There is also a clearer distinction between strategic boards and project groups.

There is commitment for Programme Management Office (PMO) structures to be implemented, and this work needs to progress quickly to ensure the PMO is equipped with the necessary tools and processes to support governance, delivery, and oversight across all transformation activity - not just digital projects.

The establishment of a corporate PMO is considered good practice, as it would bring together all projects across the organisation that contribute to transformation and enable the tracking of benefits in real cash terms.

Recommendation 4: Leicester City Council’s financial strategy needs to be aligned with council priorities. The council should consider the development of a delivery plan outlining the priorities which would support this alignment.

The increase in senior capacity within the finance team has strengthened the strategic impact of the s151 officer. Relationships between the finance team and service directors are now far stronger, emerging risks are well understood, and the corporate management team is working collectively to identify mitigations.

The peer team also noted a strong and constructive relationship with external audit, including proactive self-referral where appropriate. To maximise the value of this, the s151 officer should ensure that external audit views on financial sustainability are routinely shared with service directors so that risks, implications and actions are jointly owned.

The 2026/27 financial strategy (currently in development) is beginning to embed strategic objectives and service priorities more explicitly. The council is strengthening the integration between its three-year financial plan and service delivery plans. The additional capacity within the finance team is helping to build this closer collaboration with services. It is expected that the 2026/27 financial plan will be fully aligned with the council’s strategic objectives.

To strengthen the ‘golden thread’ further, the council should establish a coherent strategic planning process that articulates the council’s priorities and links them to the three-year financial plan, performance management framework, service plans, and staff appraisal systems. This would provide a clear strategic direction and shared vision that unites political ambition with operational delivery. It will also ensure the whole organisation works cohesively towards long-term goals, improving services, fostering effective partnerships, and achieving better outcomes for residents. 

This would give the Mayor and Executive Members clear strategic oversight, enabling them to communicate a consistent message about the council’s purpose, direction, ambitions and impact. A clear and shared purpose will also build confidence among staff and partners, maintain focus during change, ensure accountability for progress, and help the council celebrate achievements.

Recommendation 5: There are a significant number of boards and/or groups. These need to be reviewed in line with the wider transformation agenda including defining the roles and responsibilities of these groups, decision making and reporting. This would support improving capacity and time management. 

The peer team heard that the council has simplified and clarified its board and group structures, creating clearer lines of accountability. This rationalisation has reduced duplication, and senior staff are more satisfied with how the current arrangements work. 

Streamlining boards is good practice as it helps decision-making become faster, clearer, and more consistent. Fewer, well-defined boards mean less overlap of responsibilities and clearer ownership of actions, reducing the risk of confusion or duplication of effort. It also enables senior leaders to focus their time and attention on strategic issues rather than operational detail.

To maintain these improvements, the peer team suggests that the council should keep its board structures under review to ensure they remain relevant and aligned with its transformation priorities. 

Some signs of delivery fatigue among staff are beginning to appear and will need attention. Although morale remains high and goodwill is strong, sustaining this will require ongoing clarity, support and clear prioritisation. This means continuing to create opportunities to build resilience within teams.

Recommendation 6: Develop a communications plan linked to the overall financial position and transformation agenda

The council has introduced a new communications approach that focuses on highlighting positive financial and transformation achievements, rather than emphasising budget shortfalls. Plans are also in place to celebrate staff contributions and maintain morale through internal engagement activities. Directorates have begun strengthening staff engagement further by introducing initiatives such as staff conferences.

Wider staff engagement, clearer accountability and greater confidence in managing budgets have led to improvements in financial management across the organisation. Services now have a better grasp of their cost drivers and are more active in identifying mitigations, cost avoidance and savings. Translating financial expectations into service-focused language, including using Key Performance Indicators (KPIs) rather than £s, has helped reinforce this shift.

The financial planning process has also benefited from stronger engagement with scrutiny and Members more broadly. The council’s plan to involve scrutiny more directly in transformation work will help ensure progress is monitored and improvements are held to account.

However, there is more the council can do to enhance both its internal and external communications. Internally, it should develop and embed a clear, consistent, and accessible transformation narrative that aligns with the council’s goal of delivering better outcomes for Leicester. This would help staff understand why change is happening, what their role is, and what actions are being taken. In turn, they would be better equipped to explain and translate this transformation to their teams in ways that are relevant to their day-to-day work.

Externally, the council has an opportunity to build confidence and trust by promoting the positive changes and innovations it is implementing. This includes sharing examples of success - such as the progress made in homelessness prevention, social care services (particularly children’s placements), and digital delivery. Proactively communicating these achievements will help strengthen the council’s reputation, demonstrate the impact of its transformation work and foster a stronger connection with residents, partners and stakeholders.

Recommendation 7: Take up mentoring, coaching, and leadership training opportunities that enable Members and officers to deliver transformation.

Leadership development is one of the council’s three core organisational development priorities. A comprehensive Member training programme has been introduced in partnership with the Local Government Association (LGA) and the Local Government Information Unit (LGIU). Member and officer relationships are positive and based on mutual respect.

In social care, staff have been developing agile working practices and receiving training to support project delivery. Those involved in the DDaT programme have received training in Power BI and AI awareness. This focus on skills development could now be broadened to include service-based change leadership, helping to build transformation capability across the organisation. 

The LGA would like to thank Leicester City Council for undertaking an LGA FPC 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. 

Mark Edgell (Principal Adviser) is the main point of contact between the authority and the Local Government Association (LGA) and his e-mail is: [email protected].