LGA Corporate Peer Challenge – Progress Review: Cheshire East Council

Cheshire East Council undertook a Local Government Association (LGA) corporate peer challenge (CPC) from 26-29 March 2024.  The council published the CPC report alongside the council’s response through a structured action plan at their full council meeting in July 2024.  As part of the CPC process, there is agreement that a one-day progress review will take place within 12 months of the original review to support follow-up conversations as well as reflecting on any changes in the context and circumstances of the council.  The review, completed by a subset of the original team, is designed to provide space for the council’s senior political and managerial leadership to: 

• Receive feedback from peers on the early progress made by the council against the CPC recommendations and the council’s action plan.
• Consider the reflections of peers 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.
• Better understand any changes in context which may affect the council’s progress or alter previously developed plans. 

The progress review was completed on Thursday 13 February, focusing on the original 18 recommendations from the CPC.  To support joined-up conversations, these recommendations were aggregated into the following four themes to allow them to be discussed in the round and avoid a transactional focus.  The original recommendations of the CPC are listed in appendix one of this report for completeness. 

• A whole council approach to improvement: Including the council adopting a crisis management approach to responding to the CPC findings and the establishment of an externally chaired assurance panel.
• Financial management and recovery: Including improving financial reporting mechanisms, and the corporate policy committee being empowered to lead this work.
• Political priorities and governance: This considered the priorities of the council as included in their council plan, their approach to improving the governance system and practice of the council (including report quality and training for elected members).
• Human resources, organisational development, and culture: This theme considers the recruitment and appointment to a permanent senior structure, and issues of performance management and alignment of corporate capacity.  

To support this review the council shared an overview of their action plan that set out their progress to-date and intended future actions, as well as a short position statement that added narrative to these themes.  For this review, interviews were held with the council’s chief executive, leader, deputy leader, and the leader of the Conservative group.  Alongside this, meetings were held with executive directors, statutory officers, and the chair of the independent assurance panel, as well as a focus group with wider staff representatives.

This work was supported by the following peers, offering a mixture of continuity with the original peer team, members of the Cheshire East assurance panel, as well as fresh perspectives on the council’s progress.   

• lead peer – Jackie Yates (chief executive – Reading Council).
• member peer – Cllr Eammon O’Brien (leader – Bury Council).
• member peer – Cllr Adam Paynter (Cornwall Council).
• challenge manager - Matt Dodd (senior regional advisor – LGA).
• shadow peer - Cath Buckley (senior regional advisor – LGA).    

The original CPC of Cheshire East Council set out both the breadth and scale of issues that the organisation needed to address, including key challenges of service standards, financial sustainability, effective governance, capacity, and culture.  The council is aware that given the interdependency of these issues, their resolution requires careful sequencing, prioritisation, and a relentless focus to make the necessary improvements for the residents of the borough, and that further work is required on both the planning and delivery of this work. 

It is to the council’s credit that the original findings and recommendations of peer challenge were accepted in full, and steps have been taken to identify actions set out in a detailed action plan with clear timelines and named owners.  The council has also worked with the LGA since the peer challenge to establish an independent assurance panel to act as a forum to provide external advice, challenge and expertise to support the council in ‘driving-forward improvement, transformation, and in developing its Corporate Plan’ and, importantly, ensuring this work is aligned to the council’s medium term financial strategy.

Alongside the establishment of the assurance panel, there have been further significant changes in the council’s operating context.  This included the publication of the council’s OFSTED report in May 2024 which found children’s services to be ‘inadequate’.  The council also appointed a new leader in July 2024 and continued to be led as a Labour and Independent joint-administration.  In August, CIPFA completed an assurance review associated with the organisation’s original application for exceptional financial support (EFS) for £17.6 million covering the financial years of 2023-24 and 2024-2025 (however this report was not published until following the progress review).  At the time of this progress review, the council had submitted a second subsequent application for EFS worth £25.3 million in February 2025.   

The peer team recognises that there has been progress in key areas, including the establishment of the independent assurance panel and the approval of a new council plan.  This was presented in the review as 35 actions having been ‘completed’, 13 ‘on track’ with just eight highlighted as ‘red’.  For example, the council report that they have completed ‘adopting a crisis management approach in responding to these issues’, recognising the introduction of weekly meetings focused on areas of overspend and establishing the council’s strategic financial management board.  Whilst the peer team appreciate that the council’s plan is focused on progress against agreed activity and actions, it is the team’s belief that this presentation of activity presents an optimistic view regarding impact and would encourage a greater focus on outcomes. 

In this spirit, the team would encourage the council to move towards monitoring and presenting progress of the action plan through impact and not just activity.  This will mirror the approach that the council have taken in their improvement plan for children’s services which is assessed in this manner. Furthermore, this original recommendation was presented in the language of ‘crisis’ to support both immediate action and sustained pace.  Whilst there has been progress made by the council, it is recognised by the organisation that some aspects of their response have needed to significantly increase for the organisation to realise the benefit, including the potential quick wins in areas of governance.

Throughout this progress review, the peer team heard mixed feedback on the pace of progress, which is being made by the council, with some key areas having made limited progress.  This variance is to be expected given the breadth of improvement work that the council is undertaking.  In this context and recognising that a significant amount of work remains to be completed, the sequencing and prioritisation of effort will be essential for both aligning capacity and generating momentum in focused areas of work.   Without this prioritisation and clear communication thereof, there remains a risk that this tension of pace may impact on the council’s ability to deliver change.  This communication will support staff to better understand the context of change, and how their actions contribute towards a bigger picture, but also provides the opportunity to re-establish clear expectations on the values and behaviours included in the new council plan. 

A key contributing factor towards both the pace of change, and Cheshire East’s wider response is the capacity within the organisation, including in senior roles.  A key recommendation from the CPC was to ‘urgently agree and recruit’ the council’s officer leadership team.  The council has invested time and energy in addressing this issue and the peer team recognise that this work has included strengthening the voice of and seniority of finance within their structure as well as bolstering corporate capacity through the creation of a assistant chief executive role and bringing together improvement and transformation roles within the council. However, the substantive appointments to all of these roles had not been completed at the time of this review and there were still 11 interims and six vacancies across their top three-tiers.  The peer team believe that progress could have been made to expediate this process sooner (particularly for statutory roles).  It was not within the remit of this progress review to consider the council’s constitution which will have been central to this timeline. 

It is positive that the council is moving towards a permanent footing for these roles in 2025, and it is hoped that this will provide the strategic capacity and stability required for the organisation.  Furthermore, having the strategic capacity within the organisation to work on the development and implementation of a new mayoral strategic authority for Cheshire and Warrington as part of the government’s devolution priority programme will also be important.  In this context, the peer team recognise that the council has made a mature decision in extending the current programme arrangements so that this work is chaired sub-regionally by one of their neighbouring authorities in the short-term recognising this balance.  The original peer challenge report highlighted that ‘given the assets of the borough and the positive sub-reginal relationships that exist, this agenda has significant potential but taking it forward will create capacity challenges that will need to be considered in the round’.  The peer team encourages the Council to remain live to balancing these demands over the coming months and years. 

Since the original corporate peer challenge in March 2024, the council have had their transformation plan approved by central government which was a requirement of their first application for exceptional financial support.  The approval of this plan was a significant milestone in addressing their financial position and providing an indication of the proposals for change and reform across the organisation.  Through this progress review, it is clear that there is a significant appetite and energy for reform from senior political and managerial leaders in the organisation, and that this is linked to a wider ambition for improvement. 

The council’s progress regarding transformation has included the development of a programme management office to support consistency, monitoring, and structure regarding these reforms.  However, there is still a complicated landscape of programmes, projects, and themes for improvement, the peer team were told that the council currently have 41 programmes ‘open’ and an additional 139 ICT projects.  In this context, it will be important that there is management of interdependencies, sequencing, and resource alignment to support delivery in priority areas.  This will require further work on prioritisation and rationalisation over the coming months. 

The council has worked closely with an external transformation partner over the past 12 months and has invested approximately £3.1 million to support this work and the development of medium-term saving proposals linked to a new ‘target operating model’.  With the council relying on exceptional financial support for a second successive year, it is imperative that the proposals developed deliver the benefits and efficiencies identified and included within the council’s medium-term financial plan over the coming years.  Given the significant investment, Cheshire East need to ensure that there are effective arrangements in place to maximise the benefits of this relationship, including the transfer of knowledge and development of robust proposals and concrete next steps that the council can take forward once this partnership arrangement expires.   It is also essential that the council undertakes the necessary engagement work to support staff and councillors to understand what the target operating model is, and the detailed implementation plans which will support the transition to any new arrangements, building on the staff engagement events and sessions which have been held to date. 

Positively, the council have held staff engagement events to launch this work (the council’s transformation programme) and engage on the content of these proposals.  This has been accompanied by increasing the visibility of the council leader, deputy leader, launching quarterly staff events on issues of priorities and transformation.  However, there was feedback from the workforce that there was a lack of specific detail regarding what the proposals meant for them and their services which is not unexpected given the scale of change, however, the peer team were told of examples whereby staff had received key announcements through the press rather than internal communication.  Therefore, the peer team would encourage the council to move towards a conversational model of regular engagement on these issues.  The newly created roles of director of people and head of organisational development will be key to giving the organisation more grip and capacity in these areas.   Furthermore, given the likely impact that the council’s changes and decisions regarding their budget position will bring to residents, the council needs to remain mindful of resident engagement and making sure communities are informed of any proposed changes to service delivery arrangements as appropriate, and that robust consultation and engagement is completed on proposals as they develop. 

As noted above, the council’s approach to improvement and transformation has been supported by the establishment of an independent assurance panel.  This panel has provided the council with access to insight, expertise, and experience from across the sector, including the perspectives of a chief executive, financial, governance, and transformation colleagues, as well as political perspectives through Labour, Conservative, and Independent councillors working elsewhere in the sector.  The panel first met in August and has held four meetings since its inception. 

The peer team was struck by the calibre of those supporting the council through this panel, but also through their appetite to help and support the organisation.  In this context, the team recommends that Cheshire East avail themselves of the opportunities and learning which this model provides and consider the processes and ‘client function’ which are required to maximise the impact of this model, including canvassing for dates.  The panels recent meetings have taken a thematic approach to considering the council’s improvement which has supported a focus on depth and understanding of issues, including a recent focus on financial issues. As the council pass the one-year anniversary of the peer review and their first panel meeting, there is an opportunity to consider their terms of reference including the necessary criteria of success required for the panel to stand down, and for the council to provide assurance against these pre-agreed standards and milestones.  This will require explicit discussions regarding expectations for this work.

Finally, the peer team appreciate that the assurance panel have aligned their work with the findings of this review and will have a dedicated item at a future meeting to discuss the content and recommendations of this report.  It is hoped that this will provide an opportunity for this report to be considered alongside the wider work of the panel and hoped that this will support the reporting requirements of the forum.

The financial position of the council remains one of the organisation’s biggest and most pressing challenges.  The council’s original application for £17.6 million exceptional financial support (EFS) for 2023-24 and 2024-2025 was approved following the development and central government approval of a transformation plan.  The peer team previously recognised that this funding was linked specifically to costs related to the cancellation of High Speed Two and SEND interest rates.  In 2024 the peer team recognised that the council’s medium-term financial position was ‘compounded’ because of the organisations dedicated school’s grant deficit which was forecast to be £89.6 million at the end of 2023-2024.  The latest position from the council is that this is now forecast to be £115 million illustrating that this risk remains.  

However, structural challenges are reflected in the council having an £18.6 million overspend for 2024-2025 linked to pressures on demand-led budgets.  In this context, the team appreciate that the council’s second application for EFS of £25.3 million is linked to these pressures.  The peer team previously highlighted that the council had significantly reduced their reserves (by 50%) in the two-years prior to their corporate peer challenge (with £11 million used to balance the revenue budget in 2023-2024).  The council has publicly confirmed their intention to replenish these reserves to a minimum level of £20 million through annual £5 million increases over the coming years, but the peer team is not in a position to comment on the detail within these plans, or the likelihood of their delivery.

The peer team originally stated that the council’s application for EFS provided the organisation with ‘an artificial and expensive safety net’, and that any use of this funding would incur additional costs.  The use of this support in 2024-2025, as well as the second application demonstrate the challenging financial position that the council is still in, and as such, previous findings on the importance of accurate forecasting, reporting, and monitoring remain true.

Whilst the provision of EFS will provide some additional time to the organisation, it is essential that this time is used to develop, refine, and implement the transformation plans required to move towards financial sustainability.  Continued focussed effort on developing and delivering the savings and income generation proposals necessary to set a balanced budget without the use of EFS will be required and this will likely involve politically difficult decisions. 

There are sizeable financial savings included in the council’s medium term financial strategy which are linked to a target operating model of £3 million and the digital blueprint initiative saving £4 million.  Recognising this, the council need to assure themselves regarding the robustness of business cases, deliverability, and benefits realisation to achieve these medium-term goals.  Furthermore, it is important that as these transformation proposals are developed that the organisation does not lose sight of the immediate short-term proposals which can support this process.  This will include options which may not be seen as public service reform or transformation but will support immediate savings including opportunities to re-commission and re-negotiate contracts, consideration of the council’s assets, and challenging growth assumptions. 

Positively, there is a better understanding of the council’s financial position within the organisation.  This includes a better knowledge of the organisation’s estate and clearer corporate grip regarding these challenges.  This will be a key attribute for the council’s continued improvement, both in being able to plan and manage changes across the organisation, but also in providing assurance to external stakeholders and partners.  It is still not known what (if any) the additional reporting requirements associated with EFS will be for the organisation. 

Finally, it is recognised that the council applied for central-government permission to raise council tax beyond the 5% threshold but was not granted approval.  The council undertook a process of engagement with councillors and staff to discuss planning assumptions and scenario modelling for their budget in this context.  However, it is important that the organisation recognises the need for clear communication and engagement regarding the budget and their financial position in the round, as the prospect of increases of these levels will have caused anxiety to residents, staff, and partner organisations, and the refusal of the application being in the public domain will have raised questions regarding the implications of this decision.  The peer team was told that staff would have welcomed additional communication regarding the impact and implications of the council’s application for a council tax increase of 10 per cent being rejected. 

Throughout this review, the peer team consistently heard about the constructive and collaborative approach that political group leaders have taken towards issues of improvement. This included the political groups working effectively together to support the establishment of the independent assurance panel and there being broad cross-party support towards delivery of the council’s action plan.  Similarly, the time, energy and effort of group leaders to support this work has been apparent through this review, this was succinctly described as “an improved political atmosphere within the organisation”.  This included recognition from officers and other groups for the contributions of the new leader and deputy leader to this improvement. 

This cross-party working has supported the development of a new council plan which was approved at the council’s corporate policy committee ahead of this review.  This plan demonstrates progress against a significant recommendation of the original CPC.  As the plan is still new, it is natural that further work will be required to both embed it within the organisation and support its operationalisation across the organisation.  This includes the development of a supporting performance management framework, and alignment with staff appraisal policies, as well as ongoing alignment with the council’s transformation plan.  Finally, the plan should provide a clear framework to support prioritisation within the council. 

The council received four specific recommendations regarding their governance and decision-making. Whilst it shows self-awareness, it is disappointing that the council has assessed their progress as ‘red’ in reviewing the council’s decision-making framework and improving the quality of reports presented to committee through further training and development. Whilst there have been examples of training and development offers which have been implemented for elected-councillors, further work is required to refine this approach and maximise the benefit these offers of support to all councillors, ensuring that training and development sessions are appropriately tailored to the context of the council, including the use of the committee system. 

The peer team is aware that a report has been presented to the council’s February policy committee outlining potential approaches and structural reforms to the council’s governance processes, to progress the council’s response to two of these recommendations.  This report includes the establishment of a decision making and governance working group to develop and assess proposals for new governance methods ahead of a proposed implementation date of May 2026.  Whilst it is encouraging that the council is considering these issues, it is important the council has clarity regarding the design principles and values which it wants to include in any new system, recognising that their current principles were developed in 2019. 

Importantly the peer team encourage the council to make-sure that these conversations regarding structure and governance do not detract from the opportunity for immediate improvements. By maintaining a focus on the basics such as report quality, member training, and sharing of information and wider communications within the council, there is a significant opportunity for smaller-scale changes to have a significant collective impact on both issues of governance and culture.   

The council has made progress in this area, including the development and implementation of the findings of the decision making and accountability exercise to support their new senior leadership team structure which was approved at full council in October 2024. This new structure addresses the previous recommendation of the peer team to ‘strengthen the voice of finance’ within the organisation and creates additional corporate capacity through both new roles and bringing together transformation and improvement.  However, with it being 11 months since the peer team were originally onsite, it is now unlikely that new arrangements will be in-place and embedded ahead of the summer of 2025.  Whilst the council has used the interim market to bring capacity over the past 12-months, the time taken to agree and recruit to this structure will have impacted on the ability of the council to address the wider issues in the original peer challenge.  Whilst the assurance panel have regularly requested the council to accelerate this work, the council is comfortable with the approach and pace to-date. In this context, the peer team also believes that there would have been benefit to increased pace in this area. 

The peer team was told that interim post holders had made significant contributions to the organisation over the past 12-months, bringing stability to statutory roles, and driving forward improvement (including financial reporting, MTFS development, and responding to the OFSTED findings).  However, the recruitment of permanent post-holders to the council’s leadership team presents the opportunity for the organisation to plan over a longer-time period, and the chance to better develop a collective sense of team in addressing issues and their interdependencies. 

Given the breadth of improvement activity happening across Cheshire East, communication with staff will always be challenging.  The council has made a concerted effort to improve engagement with staff, including the use of staffing events to communicate expected changes and the development of a regular staff newsletter regarding transformation.  These developments are an important step and illustrate the council’s eagerness for improvement in this area.  However, the peer team were still told of instances when staff had first heard of significant developments through the local press and media rather than from the council.  Moving forward, the council needs to move towards a regular rhythm of engagement and communication that is accessible to all staff and informed by future publication of key committee papers and that is accompanied by set-piece events. 

Culturally, there remains work to be done in defining, shaping and cultivating the culture that the council is working towards.  The creation of a new posts through a director level role and head of organisational development illustrate the council’s commitment to improvement in these areas. There was mixed feedback on the progress that has been made in this regard, which is to be expected given the juncture that the council is at in recruiting to senior roles. It is appreciated that the council chief executive is the sponsor for the council’s workforce programme, and this will give visibility to the importance of this work.

Whilst there is a clear ambition to move forward quickly, to navigate this challenge effectively, the organisation must take a strategic approach to prioritisation, ensuring that efforts are concentrated on initiatives that will have the most meaningful impact.  Leadership should establish clear, consistent messaging to align teams and provide clarity on priorities, supporting others in the organisation to understand how these issues fit together. 

Additionally, engaging staff through regular feedback mechanisms, including regular conversations, events, and a full suite of tools such as pulse and staff surveys will provide valuable insights into areas requiring attention and understanding the impact of progress.  By leveraging staff engagement, the organisation can identify areas of challenge, assess the impact of cultural initiatives, and refine its approach based on real input from employees.  The council recognises the challenge of balancing candour regarding the savings which need to be released from the organisation and developing enthusiasm from staff to work at Cheshire East.

We appreciate that the political leadership and senior management of the council will want to reflect on these findings and suggestions, and how the organisation can best take them forward.  It was agreed that this report would be presented to a future meeting of the council’s assurance panel and may be used to inform their wider updates on the council.

Under the umbrella of sector led improvement, the LGA will continue to offer ongoing support and advice to councils following these reviews and will continue to coordinate this support through engagement with the council’s assurance panel.  Whilst it is not intended for this progress review to create additional recommendations for the council, the peer team believe that the council may wish to further consider the following, recognising that there is ongoing work underway in a number of these areas:

• Action plan structure and content: The council should assure themselves that the component parts of the action plan answer the wider challenges from the original corporate peer challenge.  Moving forward, the council should consider the relationship between the content of this plan alongside children’s improvement actions, and the consequences of any financial review associated with EFS.  This should include consideration of monitoring the plan through impact, rather than activity.
• Transformation structure and rigour: The peer team recognise that the council has sizeable savings associated with their transformation programme (target operating model, digital reform).  The council need to ensure that the resources are in-place to support these reforms, including the structures of business cases, delivery of proposals, and approaches to benefits realisation.  This will also require the organisation to ensure that the contract benefits that they have in-place are delivered and managed with their transformation partner.
• Council plan: The development of a new council plan is an important milestone.  The next stage of this work requires the content to operationalise the document through wider alignment with a performance framework, and links to organisational development.  The plan needs to support the prioritisation and delivery required within the council’s transformation plan and the golden thread communicated to the workforce, including what it means for them.
• Senior leadership team: Once the council’s SLT is in place, further work is required to define and design the culture that the organisation is seeking to implement, and the processes to support this need embedding.
• Governance: As well as the capacity that is being invested into the governance structures and potential reforms, it is important that the council also considers the immediate improvement which can be made, not losing sight of the small improvements which will cumulatively have a significant impact.   

Claire Hogan Assistant Director for Regional Improvement and Support is the main point of contact between the authority and the Local Government Association (LGA), and her e-mail address is [email protected]