Ministry decides against reissuing best value notice against borough council despite continued concern at level of debt

The Ministry of Housing, Communities and Local Government (MHCLG) has decided not to reissue Eastleigh Borough Council with a best value notice, but said it remains concerned about the size of the local authority’s debt.

Eastleigh was issued with a best value notice on 19 December 2023 amid ongoing concerns “regarding the council's significant debt and shortage of capacity to manage the scale and ambition of its commercial and housing developments”.

These concerns had been highlighted in a capital assurance review published by CIPFA in July 2023. This found that Eastleigh was wrestling with a debt 45 times its core spending power.

Shortages in terms of capacity and expertise in Eastleigh's asset management team, finance, and internal audit had "impacted" capacity to manage the scale and ambition of its commercial and housing developments, CIPFA said.

The best value notice called on the borough council to engage with the department to provide assurance of its progress against CIPFA’s recommendations and its ability to manage the identified risks.

In a letter today (19 December) to James Strachan, Eastleigh’s Chief Executive, Suzanne Clarke Deputy Director, Local Government Finance at MHCLG acknowledged that the council had worked positively with the department and had gained extensive external scrutiny and challenge throughout the period.

The latter included undertaking external governance reviews with the Centre for Governance and Scrutiny (CfGS), and the Society of Local Authority Chief Executives (SOLACE).

Clarke said: “Notably, the capacity and capability of key functional areas has increased, including in finance and asset management, with recruitment taking place into several key roles. The council has also drafted a debt reduction plan in response to the BVN, including a comprehensive review of the council's Capital Programme.”

In light of this and based on the available evidence, ministers were reassured as to Eastleigh’s capacity to comply with its Best Value Duty under the Local Government Act 1999 and so the notice would not be reissued at this time, she wrote.

However, Clarke added: “Whilst we will not be renewing the notice, we still remain concerned about the significant debt which is held by the council and the risk which is carried with this. As a result, the council should continue engaging regularly with the department to provide assurance of the steps being taken to reduce and manage its overall debt.”

It warned that should the MInistry deem it necessary to seek further assurance through a best value notice in future, based on the available evidence, a further notice would be issued.

A spokesperson for Eastleigh Borough Council said the decision not to renew confirmed the findings of two independent governance reviews conducted earlier this year "that Eastleigh is a well-run authority" with a clear framework for governance and performance management.

The leader of the council, Keith House, meanwhile added: “We are pleased with the outcome, which highlights the hard work of officers and members alike, in providing reassurance that Eastleigh Borough Council is a well-run authority.

"This milestone confirms our ability to meet the challenges of delivering innovative, value-for-money services for our community."