The Scrutiny Committee - Corporate and Resources of Somerset Council met on 24 September 2025, to discuss a range of reports covering topics from budget monitoring to risk management and the implementation of a modern data and AI council. The committee reviewed the proposed budget development approach and timetable, requesting that individual scrutiny committees be consulted as early as possible in the budget process. They also considered the additional recommendations to be made to the Executive Committee regarding the Whole Council Transformation Plan.

Whole Council Transformation Plan

The Scrutiny Committee reviewed additional recommendations to be made to the Executive Committee regarding the Whole Council Transformation Plan. These recommendations included:

• Processes should examine mitigation as well as risk.
• Quarterly reports should come to Scrutiny before the Executive Committee.
• Anything that requires service changes should come to Scrutiny first.
• The Governance paragraphs in the Scrutiny report should also be in the Executive report.
• The Committee endorses the people strategy of the Executive report which recognises the work of our staff.

The Whole Council Transformation Plan aims to address the financial challenges faced by Somerset Council and deliver essential services to the community. The plan seeks a strategic transformation partner to achieve financial sustainability with flexibility.

Modern Data and AI Council

The committee reviewed and scrutinised the draft Executive Report and associated business case for the Modern Data & AI Council, ahead of its consideration by the Executive on 1 October 2025. The council report sought approval for temporary funding to boost capacity in the ICT and Strategy, Performance and Communications team to establish the Modern Data & AI Council capability. The committee was asked to consider any additional risks or issues that the Executive should consider.

The Modern Data & AI Council aims to consolidate information across services and partners to provide trusted data views, predictive insights, and governed AI to support staff. For residents, this should translate to faster, more coordinated support and clearer decisions. The programme is designed to reduce cost growth and deliver efficiencies that can be reinvested in frontline priorities.

The report outlined that the data team has proven the organisation's ability to deliver predictive analytics, master data matching, and agentic AI¹ solutions. The challenge now involves scaling, embedding these into workflows, and driving adoption.

The report stated that a strategic investment in the Modern Data & AI Council would enable data and AI to be a catalyst for transforming how services are delivered and resources are used, enabling earlier interventions, smarter decision-making, and more efficient use of public funds.

The funding request of £1,560,687 would be allocated against the Capitalisation of Transformation Costs budget line in the capital programme. There is a scheduled breakpoint in August 2026, where the S151 Officer² will decide on the continuation of the project based on evidence of outcomes achieved to date.

Budget and Medium-Term Financial Plan Approach and Timetable

The committee noted the proposed budget development approach and timetable for the 2026/27 budget setting and Medium-Term Financial Plan (MTFP) for the period 2026/27 to 2030/31. The committee felt strongly that the consideration of the budget should occur as early as possible to allow the individual scrutiny committees to be consulted as soon as possible.

The aim is to have the budget available for consultation by scrutiny committees and the public by 3 December, with feedback ready for Full Council by the end of February 2026. The Fair Funding review is underway, but Somerset Council is not expected to be a significant winner, meaning difficult decisions will still be necessary.

General Fund Revenue Budget Monitoring Report 2025/26

The committee considered the General Fund Revenue Budget Monitoring Report for Quarter 1, ending June 2025. The report highlighted a forecast overspend of £5.409m against a net budget of £650.090m. The committee noted recommendations a to h for the Executive Committee but also requested that that figures are provided sooner for the relevant quarter or month and want them to be consistent across the directorates.

The report noted that without a Capitalisation Direction³ of £43.000m from the Ministry of Housing, Communities and Local Government (MHCLG), the authority would have been facing a forecast overspend of £48.409m (7.28%).

The main overspend was in adult social care due to a housing contract to support young people that exceeded the budget, and in children and families, where a £3.7m pressure on external placements was continuing. The Deficit Management Plan for Special Educational Needs and Disability (SEND) had now be agreed for the high needs block but that there was a forecasted deficit of £96m by year end.

The committee reaffirmed its commitment to avoiding a Section 114 notice⁴ in 2025/26 by continuing and strengthening its financial management actions, with regular monitoring and reporting to ensure accountability.

Housing Revenue Account Revenue and Capital Budget Monitoring Report

The committee reviewed the Housing Revenue Account (HRA) Revenue and Capital Budget Monitoring Report for Quarter 1, ending June 2025. The report highlighted a forecast underspend of £1.249m for 2025/26.

The main variances were being reported in the following areas:

• Repairs and Maintenance: forecast underspend of £0.774m due to staff vacancies, reduced need for compliance contract spend, and the current forecast for the void repairs service.
• Supervision and management: forecast underspend of £0.134m, mainly due to staff vacancies across the HRA structure.
• Other Operating Income and Expenditure: forecast underspend of £0.634, of which £0.187m for provisional deprecation charges and £0.447m for estimated interest charges on borrowing.
• Special Services: forecast overspend of £0.286m, mainly due to a new cleaning contract, procured during the latter part of 2024/25, where budgets now need to be updated to reflect this new contract cost.

The HRA Capital Programme for 2025/26 onwards is £264.903m. At the end of June 2025, actual spend year to date is £8.615m with a forecast outturn of £69.299m for 2025/26. The forecast is an underspend of £5.485m, with £4.315m proposed to be carried forward into 2026/27 and £1.170m to be removed from the capital programme.

Strategic, and High Scoring Tactical and Operational Risk Q1 Update

The committee received an update on the council's strategic risk profile and high scoring tactical and operational risks. Eight strategic risk scores remained the same compared to May 2025, with two risks reducing – contract management and compliance and fraud. One new strategic risk was proposed – the escalation in High Needs budget pressures and the resulting cumulative deficit.

The committee was asked to provide feedback on:

• Current strategic risk profile set out in appendix A, including the escalation of High Needs Budget pressures as a new strategic risk
• Current high scoring tactical and operational risks set out in Appendices B (summary), C, D, E, F & G (detailed by directorate) - focusing on those related to Corporate & Resources.
• Proposed mitigating actions are adequate and appropriate to address concerns.

The report noted that the development and delivery of the Transformation Plan is a critical mitigating action for strategic risk ORG009: 'Medium Term Financial Sustainability – failure of the Council to achieve and maintain financial sustainability over the medium term, including the inability to set a balanced budget without reliance on exceptional financial support or one-off reserves.

Corporate Performance Management Report

The committee reviewed the Corporate Performance Management Report for Quarter 1, ending June 2025. The report outlined the performance of Somerset Council against a suite of performance measures across strategic performance, service delivery, and organisational health.

The report highlighted that 80 of the 116 measures had a RAG rating, with 20 assessed as Red, 21 Amber, and 39 Green. Some measures, targets, and tolerances remained under development and would be included from Quarter 2.

The committee was asked to review the performance information provided within appendices A and B, and in particular the narrative relating to performance this quarter.

The report also included an overview of delivery progress of the Corporate Peer Challenge Action Plan. Of the 36 actions planned and due in quarter 1, 23 had been completed and 13 were in progress.