Merton Council is set to review its financial regulations and procedures in response to increasing financial pressures, as highlighted during a recent Governance, Standards and Audit Committee meeting on 3 July 2025.
The decision comes as the council faces challenges including local government funding constraints, Dedicated Schools Grant (DSG) deficits, and the need for robust financial management.
The review was prompted by the Annual Governance Statement, which reports on the robustness of the council's governance arrangements. The statement described the council's governance framework and how it complies with the principles of the CIPFA/SOLACE Framework Delivering Good Governance in Local Government.
The Annual Governance Statement highlighted several key areas needing improvement, including:
- Updating departmental schemes of management.
- Responding to the climate emergency and reducing carbon emissions in the borough.
- Reviewing and updating financial regulations and procedures.
- Addressing financial pressures.
- Reviewing business continuity plans.
The council's financial situation is further complicated by issues such as the Dedicated Schools Grant (DSG) deficit. Merton Council became part of the DfE's High Needs Safety Valve (SV) programme for high deficit Local Authorities in March 2022 and received support funding of £28.8 million from 2021/22 to 2026/27 from the DfE (Department for Education).
The Governance, Standards and Audit Committee Annual Report for 2024-25, which was reviewed at the meeting, demonstrated the work undertaken by the committee during the year in promoting good governance and fulfilling its terms of reference. The report noted that the committee met six times during the year and provided an independent and high-level focus on the risk management framework, internal control environment, and the integrity of the financial reporting and annual governance processes.
The committee agreed to recommend that the Council note the Annual Report and agree to its publication and distribution to relevant stakeholders. The report concluded that the audit work of the committee complied with the CIPFA position statement.