Barking and Dagenham Council faces significant financial challenges, with external auditors Grant Thornton identifying weaknesses in the council's financial sustainability, governance, and efficiency. The findings were presented at the Audit and Risk Committee meeting on Monday 15 September 2025.

Grant Thornton's Interim Auditor's Annual Report 2024-25, covering the financial year 2024/25, assigned a red judgement, indicating significant weaknesses, across all three key areas: financial sustainability, governance, and improving economy, efficiency and effectiveness. The Interim Auditor's Annual Report 2024-25 acknowledged improvements since the 2023/24 report but highlighted areas needing urgent attention.

The specific factors leading to the 'red judgement' in each area are:

  • Financial Sustainability: The auditors retained the significant weakness recommendation regarding the lack of plans to address the funding gap and identified a new significant weakness in arrangements relating to Investment and Acquisitions/Asset Management.
  • Governance: A new significant weakness relating to capacity and knowledge within the Finance Team was raised, impacting the preparation of financial statements and support to service managers.
  • Improving Economy, Efficiency and Effectiveness: The auditors retained the prior year significant weakness and identified a new significant weakness in arrangements relating to procurement.

Key recommendations from Grant Thornton include:

  • Finalising a credible plan for transformation to achieve longer-term financial sustainability.
  • Agreeing a Strategic Asset Management Plan and reviewing the Investment and Acquisitions Strategy. A report scheduled for November Cabinet will introduce the Strategic Commercial Asset Management Plan (SCAMP), expanding asset oversight beyond the IAS. The due date for this is November 2025.
  • Addressing capacity and resilience within the Finance Team.
  • Strengthening procurement governance and ensuring compliance with the Procurement Act 2023.

Financial Sustainability

Grant Thornton's report stressed the need for a credible transformation plan to achieve long-term financial sustainability, including rebuilding adequate reserves. The auditors also recommended finalising a Strategic Asset Management Plan and reviewing the Investment and Acquisitions Strategy to ensure sustainability.

Governance

A key area of concern is the capacity and resilience within the Finance Team. Grant Thornton recommended urgently addressing these issues to improve financial reporting and support for service managers. To strengthen resilience and controls, a revised finance target operating model is being implemented. A full-service redesign and restructure was implemented on 1st September 2025 to better align roles with strategic and operational needs. This includes new junior roles to support internal talent development and targeted recruitment campaigns to attract experienced professionals. A comprehensive training programme is underway to enhance capability and address knowledge gaps. To ensure leadership continuity, a Succession Planning Working Group has been established. The Council remains focused on securing long-term stability and excellence in financial management. The due date for these actions is March 2026.

Improving Economy, Efficiency and Effectiveness

The auditors highlighted the need to complete the assessment of loans and leases for all subsidiary companies and partnerships. They also recommended deciding on the future of LEUK, a subsidiary of BDTP, and ensuring appropriate provision has been made to cover any shortfall in terms of the sale value versus outstanding loans to BDPT. Strengthening procurement governance and ensuring compliance with the Procurement Act 2023 were also identified as critical. The council is strengthening procurement governance and operational resilience through a comprehensive improvement programme. This includes:

  • A new procurement strategy nearing formal approval, aligning with the council's manifesto commitments.
  • Enhancements to the Procurement Board, transitioning it to an online format and broadening its remit.
  • Introduction of a unified, live procurement workplan to improve contract data capture.
  • Recruitment of a permanent Head of Procurement and Contract Management.
  • Approval of Procurement Act 2023 contract rules and review of the Invitation to Tender (ITT).

The Strategic Director of Resources, Richard Harbord, assured the committee that the council is not complacent and is actively working to address the recommendations. He noted that a revised finance target operating model is being implemented, forecasting and variance reporting are being enhanced, and the Transformation Board is being redesigned.