35         The Council continues to work on ambitious plans that aim to deliver a positive impact on the quality of life of local people. The scale of one of these physical regeneration schemes in the centre of Bath is very evident and demonstrate the complexity and difficulties in getting the scheme this far. This and other regeneration schemes in other parts of the area will provide new schools, better transport infrastructure, and more homes that are affordable.

36         It is refreshing its vision for the area following the elections in 2007 and is organising itself to deliver this. It continues to implement its organisational restructuring and change programmes to help it to deliver its plans. These include improved risk, data and project management arrangements. The establishment of corporate groups to over-see the management of change and the embedding of equalities practices across the Council are a positive move. It also is placing a sharper focus on climate change. In the last year, it has introduced a number of initiatives aimed at mitigating the impacts the Council’s activities have on this.

37          The Council continues to build its capacity by making strong links with its partners and in particular with the PCT and with the West of England partnership. These partnerships are being used address local health, housing and transport problems across the sub-region. It is also targeting extra resources and introducing measures to deliver a sustainable improving performance on processing planning applications.

The audit of the accounts and value for money

40         Your appointed auditor in 2006/07, PwC, has reported separately to the Audit Committee on the issues arising from the 2006/07 audit and has issued:

• an audit report, providing an unqualified opinion on your accounts and a conclusion on your value for money arrangements to say that these arrangements are adequate on 18 January 2008; and
• a report on the best value performance plan confirming that the Plan has been audited.

Use of Resources

50        The findings of the auditor are an important component of the CPA framework described above. In particular the Use of Resources score is derived from the assessments made by the auditor in the following areas.

• Financial reporting (including the preparation of the accounts of the Council and the way these are presented to the public).
• Financial management (including how financial management is integrated with strategy to support Council priorities).
• Financial standing (including the strength of the Council's financial position).
• Internal control (including how effectively the Council maintains properstewardship and control of its finances).
• Value for money (including an assessment of how well the Council balancesthe costs and quality of its services).

51         For the purposes of the CPA your auditor has assessed the Council’s arrangements for use of resources in these five areas as follows.

Table 2

(Note: 1 =lowest, 4 =highest)

52           The results of the assessment have been reported to the Council and the areas for improvement based on the criteria devised by the Audit Commission for the audit year 2006/07 have been highlighted. These criteria are subject to change for 2007/08 and it is important that the Council identifies any new requirements in order that they can be addressed. The areas for improvement identify what the Council needs to do in order to move to the next level. In many cases these relate to requirements to move to level 4 from level 3.

53          The key matters arising from this year's assessment are as follows.

• The Council has maintained its good performance in respect of financial management and has improved its performance with regard to its management of its asset base. Its asset management plan has now been embedded within the organisation.
• Procedures for budget setting and monitoring have been maintained at a consistent level over the last year. The Council’s financial strategy links to its strategic objectives and reflects the improvement and national priorities set out in its corporate plan.
• The Council’s service planning process is designed to incorporate business and financial planning and links into budgets. Comprehensive reporting to members includes details of performance against key financial and non-financial indicators as well as setting out achievements, risks, developmental opportunities and updates on corporate projects with financial and performance implications. There is separate specific reporting on planned savings and risks to achievement as part of the overall financial reporting.
• The Council maintained its overall spending within its revised budget for 2006/07. In general, we were satisfied that the movements between the original and revised budgets could not have been reasonably foreseen at the time when the original budget was set.
• Reserves levels have been set and reserves have been maintained at these levels for 2006/07. The levels set are based on an understanding of the Council’s future needs and risks and clearly reported to members.The Council has maintained its performance in relation to its arrangements for managing its business risks having made good progress with these in prior years. Processes for maintaining and reviewing its risk register have been formalised and a member committee is in place which is responsible for risk management and the provision of training for members and staff. These processes have become embedded in 2006/07.
• There is currently no overall business continuity plan in place and consequently, the Council’s arrangements for maintaining a sound system of internal control have been assessed as not meeting minimum requirements as this became a mandatory requirement in 2006/07. Other than this, the Council met all of the level 3 requirements in this area and so it is important that such a plan is put in place.
• Adequate procedures to promote and ensure probity and propriety in the conduct of Council business are in place. The Council should be more proactive in its role to raise standards of ethical behaviour amongst members and staff and in assessing how effectively members comply with ethical codes. In particular its whistle-blowing policy needs to be more actively publicised.
• Audit Commission profiles indicate that the Council’s expenditure is low relative to others, with overall expenditure per head of population in the lowest quartile. In particular, Education, Environment, Planning and Transport and Culture are in the lowest quartile. Notwithstanding the low level of expenditure per head on Education, school attainment levels at key stages 2 and 3 continue to be in the upper quartile when compared to other authorities.
• Expenditure in the areas of Learning Disability and Adult Mental Health continues to be relatively high. Spending in the former area is being addressed by a number of strategies including the use of pooled budgets, attempts to reduce high cost placements and a day services strategy. Efficiency savings schemes have also been implemented. Since the end of 2007, the Council has begun to implement a major change programme to deliver Adult Mental Health Services (and Older People's Mental Health Services) in partnership with the local PCT.
• Planning costs remain at the top of the upper quartile and the Council has a relatively poor performance in terms of determining applications within the target time. The Council has recently streamlined its development control committees and revised its delegation limits in order to address these issues.
• One of the aims of the Council’s Corporate Plan to the end of 31 March 2007 was to minimise increases in Council Tax. The Audit Commission profiles illustrate that the Band D level for the tax continues to be below the median level for all councils.
• In previous years the Council experienced difficulties delivering its capital programme and in early 2006/07 it implemented a number of steps to improve its processes. This has led to improvements in the way it manages its capital programme.
• The Council has continued to develop its performance management systems and is successfully embedding the behaviours necessary to support this following significant investment in its culture change programme.
• The Council has plans in place to deliver the Government’s Efficiency Review target of 7.5 per cent over the three-year period to 31 March 2008. The current plan forecasts a cumulative over-achievement against the target of 1.7 per cent.